SpaceX rebounds after sell-off pulls shares below debut level
Shares in Elon Musk’s aerospace company recovered after a sharp drop, as tech stocks came under pressure over AI spending concerns.
By James Whitfield · Staff Writer
3 min read
SpaceX shares rose 2.4 percent on Tuesday after earlier slipping below their $150 market debut price, Al Jazeera and Reuters reported. The move followed a sharp Monday decline and came as technology stocks sold off amid concerns about heavy AI spending, according to the report.
The Elon Musk-led aerospace company fell 16 percent on Monday, erasing $400bn in market value, Al Jazeera and Reuters reported. The shares remained about 10 percent above their $135 initial public offering price after Tuesday’s early volatility, according to the report.
Al Jazeera and Reuters reported that SpaceX had surged after its June 12 IPO, a run-up that made Musk the world’s first trillionaire. The company also briefly moved past Microsoft and Amazon by market value before retreating, according to the report.
A Reuters analysis cited by Al Jazeera found that, among the 50 most valuable IPOs of the past five years, investors would have done better buying an S&P 500 index fund about three-quarters of the time than investing in the large IPOs. Analysts quoted by Al Jazeera said the latest drop did not necessarily point to a weaker outlook for SpaceX.
Michael Monaghan, partner portfolio manager at FounderETFs, told Al Jazeera that a sharp sell-off in a heavily watched stock followed by a bounce can set up further gains. He said he expected the stock to move higher from there.
Al Jazeera reported that recent compute agreements were also part of the backdrop for SpaceX’s AI plans. The company reached a deal on Monday with Reflection AI that gives the startup access to its Colossus 2 data centre for $150m a month, according to the report.
That agreement followed a separate deal announced earlier in June under which Google would pay SpaceX $920m a month, Al Jazeera reported. Monaghan told the outlet that SpaceX’s revenue was rising and its balance sheet was improving, while adding that the stock’s high valuation and low float could amplify moves in either direction.
Tech stocks slide
The pressure on SpaceX came during a wider drop in technology shares, according to Al Jazeera and Reuters. The Nasdaq Composite fell 1.4 percent in morning trading, wiping out $680bn in market value, the report said.
Chip stocks helped drive the decline, Al Jazeera and Reuters reported. Micron dropped 9 percent in midday trading before its earnings report scheduled for Wednesday after the close, while Advanced Micro Devices fell 5.7 percent, Intel lost 2.4 percent and Nvidia declined 2.8 percent, according to the report.
Other memory stocks, including SanDisk, also fell 9 percent, Al Jazeera and Reuters reported. Six of the seven “Magnificent Seven” technology companies were under pressure as investors questioned whether AI spending would produce enough returns, according to the report.
Aleksandar Tomic, associate dean for strategy, innovation and technology at Boston College, told Al Jazeera that investors were showing “jitters about AI” and that it was unclear whether the concern would fade or last. He said the market could be seeing a short-term pullback or the start of a broader retreat from AI-driven valuations.
Al Jazeera reported that expectations for tighter monetary policy under new Federal Reserve Chair Kevin Warsh added to the pressure. The Fed’s latest policy forecast signalled that rates could rise at least once before year-end, according to the report.
This story draws on original reporting from Al Jazeera.