SpaceX Drops Below $135 IPO Price: Space Industry Valuation Bubble and Investment Outlook

SpaceX Falls Below IPO Price Immediately After Listing... Market Shock

SpaceX, considered the leading stock in the global aerospace industry, has shocked the stock market by falling below its initial public offering (IPO) price of $135 on its first day of trading. On the 18th (local time) in the U.S. stock market, SpaceX's stock price faced intense selling pressure, breaking below the $130 mark at one point during intraday trading. This signifies that, contrary to the massive expectations formed before the listing, market participants are raising serious doubts about the current valuation being severely overpriced.

Experts cite the release of short-term profit-taking volumes and the uncertain profitability of the space infrastructure industry as the main causes of this stock price decline. In particular, as the bubble controversy surrounding large tech and artificial intelligence (AI) stocks has spread recently, investor sentiment toward future growth stocks with high valuations relative to earnings, such as SpaceX, has cooled rapidly.

Valuation Adjustment Fear Spreading Across the Space Industry

SpaceX's sluggish stock performance is highly likely to lead to a contraction in investment sentiment across the global aerospace sector, rather than just being a single company's problem. Until now, SpaceX's unrivaled Starlink satellite internet network business and reusable rocket technology have been evaluated as 'flawless' in the market, but it is pointed out that the market's patience regarding the actual time to generate free cash flow (FCF) against massive initial infrastructure investment costs has reached its limit.

• Departure of Institutional Investors: Failing to defend the IPO price, some institutional volumes that participated in the early investment are pouring into the market.
• Sector Synchronization Phenomenon: Stock prices of other aerospace-related companies, such as Virgin Galactic and Rocket Lab, are also unable to avoid a synchronized weakness.

Investor FAQ: Is it safe to buy aerospace stocks now?

Q1. Is SpaceX's stock price drop a temporary correction?

The current decline appears to be part of a multiple (enterprise value multiple relative to profitability) contraction process for tech stocks overall, rather than a simple correction. In the short term, a process to confirm the downward support line is necessary, and the net increase in Starlink subscribers to be announced in the 3rd quarter will be a major watershed for a stock price rebound.

Q2. Is it risky to invest in aerospace ETFs right now?

At the present time, when market volatility is extreme, extreme caution is needed for new entries. Since strong downward pressure can exist across the aerospace theme until the re-evaluation of SpaceX's valuation is completed, a divided purchase approach from a long-term perspective is safer than betting on short-term momentum.