SpaceX (SPCX.O) completed the largest IPO in history last month, and its stock price initially surged, but has been declining in recent weeks, currently falling below its IPO price of $135. However, the decline may be far from over—it could fall another 30% by 2028. Here are three main reasons:
1. IPO Enthusiasm Fades
Highly anticipated IPOs often ignite FOMO (Fear of Missing Out). Investors eager to bet on the prospects of hot companies rush to buy after the listing, pushing up the stock price. But the hype eventually fades, and the stock price gradually returns to fundamentals. SpaceX seems to be in this phase: its stock price has fallen 40% from its high of approximately $225, below its IPO price. Only a month after the IPO, as more investors turn to fundamentals rather than just prospects to evaluate the company, the stock price may still have room to fall.
2. AI Profitability Still a Long Way to Go
SpaceX sees AI as its biggest growth opportunity, estimating a potential market size of $28.5 trillion, of which AI-related businesses account for $26.5 trillion. This is likely one of the key reasons why SpaceX, despite its $1.8 trillion valuation, has yet to achieve stable profitability—after all, almost all US-listed companies with similar market capitalization have achieved consistent profitability. The problem is that SpaceX's AI business is currently unprofitable, and the company is investing heavily to expand its presence in this market. In 2025, this business is projected to generate $3.2 billion in revenue, but operating losses will reach a staggering $6.4 billion. To seize market share, the company will likely continue to increase investment, meaning AI is unlikely to contribute to profits in the short term. The market is increasingly cautious about this "burning money for growth" model, and if SpaceX cannot demonstrate a return on its investment, it will inevitably face similar scrutiny.
3. Competitive Barriers Are Not Absolute
SpaceX is a leader in the aerospace field, pioneering reusable rockets, significantly reducing the cost of space exploration, and continuously consolidating its leading position. However, competitors have not stopped—China and Japan have recently completed tests of reusable rockets. Although they have no intention of competing for US government contracts, these developments indicate that SpaceX's technological advantages are not insurmountable. The market may more fully reflect this potential competitive pressure in future valuations, potentially putting further pressure on the stock price.
Overall, SpaceX has solid fundamentals and a promising future. Its technological accumulation and vertical integration have also brought it a cost advantage. However, its market capitalization of $1.8 trillion still seems too aggressive. In the next year and a half, the stock price is expected to return to a more rational range. If it falls by 30% to approximately $1.26 trillion, its valuation will be more convincing, especially if its various business plans meet expectations by then.
