SpaceX Stock Jumped After IPO: Here's Why It May Reverse Soon

SpaceX (NASDAQ:SPCX) stock price jumped by 19% on its first day as a publicly-traded company, with its valuation crossing the $2 trillion mark as most analysts were expecting. 

Analysts Have Mixed Opinions on SpaceX Stock

The company has attracted mixed opinions, with some analysts predicting that it will keep soaring in the long-term. For example, Goldman Sachs (NYSE:GS) predicted that its revenue will jump by 100x by 2030. Other bulls cite its large total addressable markets in key areas like launch, broadband internet, and AI. 

However, Morningstar (NYSE:MORN) argued that the company was increasingly overvalued. Its estimate was that the stock's real value was below $1 trillion. 

Jim Chanos, the famed short-seller who blew the whistle on Enron, warned that the elevated valuation made no sense. He pointed to its losses and its 2025 revenue of $18 billion.

Why SPCX Stock May Drop After the IPO

There are several reasons why the SpaceX stock will retreat in the coming weeks or months. First, the hype surrounding its IPO will fade as investors embrace the new normal and start focusing on the upcoming OpenAI and Anthropic IPOs. 

Second, history shows that over 90% of all newly listed companies surge after their IPOs and then pull back as investors book profits. A good example of this is Meta Platforms (NASDAQ:META), which jumped from $25 to $45 shortly after its IPO. It then dropped to $17 within weeks before starting its recovery.

Most recently, Circle Internet Group (NYSE:CRCL) made headlines when it jumped from $64 to $300 within days. After a few months, the stock plunged to a low of $49.35 as the post IPO gains faded. Figma (NYSE:FIG) stock soared from $84 to $142, and then dropped to below $20. As such, despite its popularity, there is a likelihood that the SPCX stock will pull back as investors start booking profits.

Further, the company is losing billions of dollars because of its AI business, which it gained by merging with xAI. Its most recent results showed that it suffered a net loss of over $4.2 billion in the first quarter of this year. It suffered a $4.9 billion last year.

The company, together with Tesla (NASDAQ:TSLA), is spending over $119 billion on Terafab, a giant plant to manufacture chips. This spending will likely affect its profitability in the coming years. It may also push it to raise cash through at-the-market (ATM) offerings.

The other reason it may drop is that its tiered lock-up expiry will happen after 180 days. This expiration makes it possible for insiders to start selling their shares. In most cases, stocks often retreat ahead of the expiration date.

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