SpaceX (SPCX) Loses Its IPO Premium as a Bigger Supply Test Looms

With investors increasingly questioning whether massive AI and infrastructure spending will generate adequate returns, Space Exploration Technologies Corp (NASDAQ: SPCX ) has become one of the stocks caught in the broader valuation reset.

SPCX has dropped below its $135 IPO price after a sharp rally to all-time highs of $225.64. With the stock trading at about $123, it has shed about 45% in share price from its all-time high. It is also down by about 9% from its IPO price.

The significant share price pullback, as initial IPO enthusiasm cools, comes as investors increasingly assess whether the price was justified. SpaceX's valuation assumes flawless execution, which remains a big concern.

The stock has traded at about 45x estimated 2026 sales, far above most large technology companies. Investors are therefore paying for many years of future growth rather than current earnings.

The IPO valuation implied expectations consistent with revenue approaching roughly $178 billion by 2035 and potentially exceeding $500 billion over the following decade. In 2025, the company's sales rose 33% to $18.67 billion, with Starlink accounting for about 60% of the total.

SpaceX's premium valuation stems from the expectation that the company will not only dominate commercial launches and satellite internet but also become a major player in AI infrastructure and space. Much of the valuation also depends on Starship becoming fully reusable and the company achieving large Starlink expansion.

Even as investors continue to question Space Exploration Technologies Corp (NASDAQ:SPCX) valuation, lock-up expiration presents one of the biggest near-term risk. The company created an unusually small public float of about 5% of total shares. Because only about 5% of shares were initially available for trading, scarcity supported the post-IPO price. As hundreds of millions of additional shares become eligible for sale, that scarcity premium could diminish even if the company's fundamentals remain unchanged

By December, up to 40% of outstanding shares could become eligible for trading. On the other hand, Elon Musk shares will remain locked until mid-next year, meaning the largest insider stake won't be the source of selling pressure in the near term.

The lock-up expirations are a technical headwind. While it does not affect the company's fundamentals, it increases the supply of tradable shares, which can put downward pressure on the stock. This is especially the case if demand weakens and insiders sell aggressively.

SpaceX's prospects as a solid long-term investment hinge on the idea that investors are not buying into a rocket company. Instead, they are betting on a platform that could end up dominating multi-trillion-dollar industries. The company has achieved significant milestones, including Reusable Falcon 9 boosters, industry-leading launch cadence, and rapid Starlink deployment.

Starlink is the financial backbone of SpaceX. It is the primary source of profits, accounting for about 60% of revenues. Starlink also boasts of a powerful moat as it builds, owns, and launches its own rockets and satellites.

Additionally, SpaceX has become a key launch provider for NASA, the US Department of Defense, and intelligence agencies. As of last year, the company had about $22 billion in government contracts, with the vast majority, at $15 billion, derived from NASA. The long-term government contracts provide stable revenue as the commercial business matures.

SpaceX is also expected to eventually participate in several enormous markets, including global broadband, satellite communications, commercial launch services, defense infrastructure, and orbital AI computing.

SpaceX is not in any way a bad company but an outstanding business priced for near-perfect execution. While the company's valuation briefly exceeded $2 trillion, it has pulled back to about $1.6 trillion amid valuation concerns.

The stock has re-rated significantly as the premium valuation assumed years of exceptional growth from Starlink, launch services, AI initiatives, and Starship. Suggestions that revenue or margins would come in 'good' rather than 'extraordinary' were always going to hurt the stock.

Some of the risks that continue to weigh on market sentiment for the stock include launch failures or delays, regulatory setbacks, and higher-than-expected development costs. Investors are also becoming increasingly wary of large AI-related spending acquisitions. While the company spent $18 billion in AI infrastructure for GPU clusters and data centers in 2025, there are growing concerns about whether the investments will generate returns to justify the capital intensity.

Similarly, the biggest execution risk is Starship, as a large portion of SpaceX's long-term valuation assumes it becomes fully reusable and significantly lowers launch costs. Delays or technical setbacks could materially affect future growth expectations.