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SpaceX’s stunning rally stalled yesterday following a record-breaking public markets debut for Elon Musk’s rocket firm.
Shares fell by as much as 7 per cent during volatile trading – after they had been up by 6 per cent earlier in the session. They eventually closed almost 5 per cent lower.
It was the first hiccup for the stock since its $1.8 trillion initial public offering (IPO) in New York last week.
That turned Musk into a trillionaire and since then SpaceX has seen even more demand, briefly taking its valuation ahead of Amazon to make it the world’s fourth-largest company, and at one stage temporarily edging ahead of third-placed Microsoft too.
On Tuesday, the shares were up 17 per cent at their peak, leaving them 66 per cent up on the offer price and putting its valuation within a whisker of $3 trillion.
That has added hundreds of billions of dollars to Musk’s personal wealth, taking it to $1.3 trillion – a trillion more than Larry Page, the Google co-founder, who is in second place.
Splashdown: SpaceX shares fell by as much as 7% during volatile trading – after they had been up by 6% earlier in the session
Russ Mould, at the investment platform AJ Bell, said: ‘It’s not normal, especially given the absolute dollar valuations and figures involved.’
Mould pointed out that Musk had added more in personal wealth on one day than legendary investor Warren Buffett – worth $148billion – managed in his entire career.
‘It would not be a surprise if someone looked at that and blanched, because valuation is the ultimate arbiter of investment return, not excitement or narrative,’ Mould added.
Some were doubtful about SpaceX’s value before the IPO – analysts at Morningstar put it at $780billion – less than half its float price and even further below its current level. Another analyst has described it as ‘the biggest meme stock in town’.
The company includes a global communications satellite business and a hugely loss-making artificial intelligence (AI) venture as well as its rocket business. Last year, SpaceX made a $5billion loss.
Its hefty valuation hinges on outlandish ambitions, including the goal of flinging AI data centres into space and increasing its AI revenues a hundredfold.
However, investors are still sitting on huge paper gains. The IPO resulted in just over 4 per cent of shares being available to trade.
That number will rise as ‘lock-ups’ keeping insiders from cashing in expire, potentially creating selling pressure.
Closely watching will be the UK retail investors who piled in on day one, buying £270million worth of shares, and who will be hoping SpaceX continues to rocket to higher valuations rather than fall to earth.
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