One of the most successful companies in the history of the public markets had its IPO. SpaceX raised $75 billion with a valuation of about $1.77 trillion. It sold 555.5 million shares at $135. At the same time, the demand for stocks was four times higher than the number of shares and about 30% of the IPO was reserved for retail investors.
Nevertheless, the first couple of weeks of trading has already brought the dark sides of this historic moment to life: volatility.
The excitement went down, shares came back near the IPO level, and it is claimed that they have erased about $700 billion of market capitalization compared to their post-IPO peak. The stock even dropped by more than 10% in a day, which put pressure on early investors.
The main question here is very easy: is it a natural correction or the start of a bigger drop?
Why the sell-off matters
It is common for stocks to retreat after an initial public offering. Some shareholders might sell to realize gains, some institutional shareholders might reduce their holding, while others might need time for valuation.
Nevertheless, what is special about the decline in SpaceX is that it is a serious one. It is not based anymore on excitement around the IPO, but on whether SpaceX has the capability to perform and grow fast enough to match one of the most ambitious valuations in history of initial public offerings.
And there is an obvious contradiction here – SpaceX is among the best long-term growth prospects available on the market, but its stock price is highly demanding.
SpaceX is priced for the future
According to the provided market data, SpaceX generated approximately $18.7 billion in revenue in 2025 while reporting an operating loss of roughly $2.6 billion. At a valuation near $1.77 trillion, the company trades at an estimated price-to-sales ratio around 94.
That means investors are not buying SpaceX based on current earnings. They are buying expectations.
For the valuation to make sense over time, SpaceX needs to show strong progress in several areas:
- revenue growth
- margin improvement
- Starlink expansion
- launch activity
- government and defense contracts
- AI-related monetization through xAI
- a clearer path toward profitability
If the company delivers, the premium valuation may remain supported. If growth slows or profitability remains unclear, the stock may face additional pressure.
The bullish case is bigger than rockets
This thesis for future growth is not confined solely to space launches.
SpaceX owns several growth levers at once. Firstly, Starlink provides exposure to satellite internet demands across the world, including those for remote regions, enterprise customers, aviation, maritime services, and governments.
Launching is another important aspect of its business operations. Here, SpaceX enjoys a good reputation as both a supplier of launches for commercial entities and the US government thanks to its reusable rockets and active launches schedule.
The third part of the equation here is the relationship with xAI. In case these efforts are incorporated into the ecosystem of Musk Enterprises, investors may keep valuing SpaceX not only as an aerospace company.
Some estimates reported by Yahoo Finance assume that SpaceX will be able to grow revenues up to $50-80 billion per year in 2027 if current tendencies in this regard persist. This is one of the main reasons why some people believe the latest sell-off to be just a correction and not a crash.
Of course, not just revenues matter in this situation. Margins and losses also play a significant role.
Retail participation can increase volatility
Around 30% of the IPO was allocated to retail investors. This is an important detail for traders because retail-heavy participation can make price action more emotional and aggressive.
Retail-driven stocks often experience faster momentum moves, stronger reactions to headlines, larger profit-taking waves, and higher short-term volatility.
For SpaceX, this effect may be even stronger because the company combines three powerful market narratives: Elon Musk, space technology, and AI.
This does not make the stock weaker fundamentally, but it does mean traders should expect sharp swings even when the long-term story remains unchanged.
Technical view: the IPO zone is the key level
Technically speaking, the IPO region has emerged as the most crucial region on the chart.
Following the drop, SpaceX has moved back to near where it first started listing itself. The IPO region now serves as a psychological and technical battle ground.
The stock can make an effort to get its momentum going again if the buyers manage to hold off at the IPO region. Technical traders can wait for stabilization, higher lows, bullish volume, and a return towards former post-IPO highs.
Should the IPO region fail, the bearish case will be even more powerful. The breakdown below this region will indicate weak demand and further repricing.
Simply put, the IPO region may serve to define the next trend.
Why investors compare SpaceX to Tesla
In many cases, the current situation at SpaceX has been compared to that which prevailed when Tesla became a public company.
Tesla had already suffered attacks about valuation, profitability, and execution risk before it became one of the most valuable companies in the world. This has contributed to why investors are ready to pay a higher price for SpaceX.
The past experiences of Elon Musk have played a part in justifying this comparison since he has always managed to convert lofty ideas into very successful companies on the public market.
This comparison must be done cautiously, as the success of Tesla does not ensure the same results for SpaceX, given the difference in valuation and markets involved.
Key risks and catalysts
The main risks are clear:
- valuation pressure
- operating losses
- high volatility
- execution delays
- regulatory or launch-related setbacks
- weaker-than-expected Starlink growth
- broader risk-off sentiment in growth stocks
At the same time, several catalysts could support the stock:
- strong quarterly earnings
- faster revenue growth
- Starlink subscriber expansion
- new launch or defense contracts
- progress in AI-related initiatives
- positive strategic updates from Elon Musk
- successful defense of the IPO zone
What does this mean for traders?
SpaceX remains a high-potential but high-risk stock. The long-term growth story is still attractive, but the market now needs proof that future expansion can justify the company’s premium valuation.
For traders, volatility is likely to remain elevated. The stock may react sharply to earnings, Starlink updates, launch activity, government contracts, AI news, and statements from Elon Musk.
The IPO zone remains the key technical area to watch. Holding above it may support recovery attempts, while a sustained breakdown could signal a deeper repricing phase.
The main takeaway is simple: SpaceX may become one of the most important public companies of the next decade, but expectations alone are not enough. From now on, the market will focus on execution, financial performance, and growth delivery.