The SpaceX share price drop of the past month has exposed a familiar tension: the gap between the story investors wanted to buy and the business they actually bought into. One month after its 12 June listing, shares are trading at around $145, roughly 35% below their peak and 18% below the first-day high of $176.
SpaceX Share Price Drop and the Meme-Stock Warning
The opening week was extraordinary by any measure. SpaceX priced its IPO at $135 per share, the stock jumped to $150 on its first day and closed at $160.95, cementing it as the largest initial public offering of all time. The following week it hit an intraday high of $225, briefly surpassing Amazon and Microsoft in total market value.
Keith Snyder, analyst at investment research firm CFRA, pinned the frenzy partly on positioning: ‘With Elon Musk, any company he touches gets people excited. But this was also the first time people felt like they were able to invest in something that was being marketed as an AI play.’
That AI framing had genuine scaffolding. SpaceX acquired Musk’s xAI start-up, recently rebranded SpaceXAI and best known for the Grok chatbot, and began leasing data centre capacity to other technology companies. On 5 June, the company also entered into a Cloud Service Agreement with Google LLC covering access to compute capacity, according to SpaceX’s SEC filing. Under that agreement, if SpaceX fails to deliver access to the committed number of GPUs by 30 September 2026, Google may terminate the deal or accept a reduced supply with fees cut on a pro rata basis.
That deadline matters. It is a concrete operational test arriving before the company has even reported its first public earnings. The AI story needs hardware delivery to stay credible.
Meanwhile, the core business sent a less flattering signal. When Starlink announced it was cutting prices in the Memphis, Tennessee area, SpaceX shares fell 8% in a single session. Willy Lee, an investor at Neosteller, said the consensus at launch was simple: ‘Everyone saw SpaceX as an AI story.’ The Starlink price cut reminded the market that rockets and satellites are still the engine, not a footnote.
Snyder was blunt about what the first month looked like: ‘It started to look a lot like a meme stock,’ pointing to GameStop and, more recently, Wendy’s as reference points. He expects the stock to dip further, to around $115 per share, which would value SpaceX at roughly $1.5 trillion. Investors who bought in the opening days have little to celebrate. ‘If you bought around the first tick you’re definitely underwater,’ he said.
When SpaceX was added to the Nasdaq 100 index on 7 July, it fell 4.4% on a day the index itself closed down only 1.7%. Samuel Kerr, who heads analysis of equity capital markets for Mergermarket, put it plainly: ‘If you bought in the first few days, you’re not very happy right now.’
What Morgan Stanley Sees That the Market Doesn’t
The Cursor acquisition offered a brief glimpse of how Musk intends to use a public currency. SpaceX had first secured the right to acquire Cursor in April, according to Yahoo Finance, with an option to either pay $60 billion for the company or $10 billion for their joint work. On 16 June, when SpaceX shares were surging, the company formalised the $60 billion all-stock merger agreement. CNBC reported that shares gained roughly 16% that day, briefly making SpaceX the fourth most valuable company in the United States.
The deal structure has an additional wrinkle. According to a regulatory filing, the merger consideration will be based on the volume-weighted average closing price of SpaceX Class A common stock over the seven trading days immediately preceding closing, with the deal expected to complete in the third quarter of 2026, subject to regulatory approval. Kerr called the timing of the announcement ‘a level of market sophistication that almost no other issuer has.’
Against that backdrop, Morgan Stanley’s initiation of coverage carries weight. The bank’s analysts, led by Adam Jonas, set a price target of $300 per share once the 25-day post-IPO quiet period expired, according to Morningstar/MarketWatch. That target implies a market capitalisation of roughly $4 trillion and comes with an Overweight rating. The bank’s bull case is $600 per share, which would imply a market cap of roughly $8 trillion.
The revenue assumptions behind that bull case are staggering. Basenor reported that Morgan Stanley forecasts SpaceX generating $319 billion in revenue by 2030, rising to $3.3 trillion by 2040, with Starlink and terrestrial compute identified as the twin growth engines. Musk himself has projected $1 trillion in yearly revenue by 2030. SpaceX reported $18 billion in revenue last year: Musk’s figure is roughly 55 times that.
My read is that none of this is necessarily wrong. It may simply be early. SpaceX currently operates at a loss, and its first public earnings report, expected in early August, will coincide with the end of the employee lock-up period, when staff will be free to sell shares received as compensation. More supply hitting the market at the same moment as detailed financials arrives is a setup for volatility in either direction.
Kerr framed the stakes as cleanly as anyone: ‘If SpaceX can do all the things it says it will do, yes, investors are sitting on the most valuable company ever. But it’s got a lot of work to do to get there.’ The GPU delivery deadline of 30 September and the August earnings report together form the first real test of whether the AI story holds.
