SpaceX Stock Plunge: The Valuation Reality Check Behind the Sell-Off
The high-flying stock of SpaceX is facing a sharp descent. Shares have declined for six straight sessions, plummeting roughly 45% from their post-listing peak and dipping below the $135 IPO price. According to Julie Biel, Chief Market Strategist at Kayne Anderson Rudnick, even at these levels, the stock isn't necessarily a bargain.
The $1.75 Trillion Question: What Really Drove the Valuation?
In an appearance on CNBC, Biel dissected the initial valuation logic behind SpaceX's public debut. She argued that the staggering $1.75 trillion market cap at listing wasn't primarily justified by its core rocket, Starlink, or Starship businesses. While promising, these tangible operations alone couldn't support such a premium.
The key driver, she revealed, was the hype surrounding its artificial intelligence subsidiary, xAI. Early investor models heavily weighted xAI's future potential, inflating the combined entity's valuation.
Sum-of-the-Parts Analysis Suggests a Sobering Picture
Biel offered a more grounded assessment: using a sum-of-the-parts valuation method, where SpaceX's core aerospace business and xAI are valued separately, the combined worth might be closer to $900 billion.
- Core Insight: This figure highlights a significant gap from the initial listed valuation, indicating the market may have overpaid for future promises.
- Market Implication: The current sell-off could represent a market correction, stripping away excessive optimism for xAI and refocusing on aerospace fundamentals.
This analysis clarifies why the stock isn't seen as cheap despite the steep decline—its original pricing foundation is being reassessed. Investors are now forced to discern how much of their payment was for rockets today versus AI dreams tomorrow.