SpaceX stock falls 3% as IPO euphoria cools amid AI expansion costs

SpaceX shares fell sharply on Thursday as investors reassessed the company's lofty valuation following its blockbuster market debut.

Investors also weighed reports of a potential multibillion-dollar debt offering to support the company's ambitious artificial intelligence expansion plans.

Shares of Elon Musk's rockets-to-AI company declined 3% to $184.81 in trading, recovering from earlier losses in the session.

SPCX stock remained more than 30% above its initial public offering price of $135.

The decline came after SpaceX's market capitalization briefly surpassed those of Amazon and Microsoft earlier this week, propelling the newly public company into the ranks of the world's most valuable corporations.

Post-IPO rally loses momentum

SpaceX's valuation surged past $2 trillion following its Nasdaq debut last week.

Shares rallied strongly during the first two trading sessions before retreating as investors began evaluating whether the company's premium valuation can be supported by its expensive push into artificial intelligence.

The overall market appeared to play only a secondary role in the stock's movement.

Analysts noted that the shares are still adjusting to the mechanics of public trading, including the introduction of options trading and demand from passive investment funds seeking exposure to the company.

Debt offering highlights AI investment requirements

Investor sentiment was also influenced by reports that SpaceX is preparing to raise fresh capital.

According to a Reuters report, the company's bankers are expected to meet investors as early as next week to discuss a bond offering of at least $20 billion.

The potential debt issuance underscores the scale of investment required to build out SpaceX's artificial intelligence operations.

The company announced on Tuesday that it would acquire Anysphere, the developer of the AI coding assistant Cursor, in a $60 billion all-stock transaction designed to strengthen its position in enterprise artificial intelligence software.

Earlier this year, SpaceX also acquired Musk's artificial intelligence startup xAI in a record-setting deal that combined the entrepreneur's space and satellite business with the maker of the Grok chatbot.

Company filings have shown that revenue has continued to rise even as losses have deepened, reflecting the significant capital requirements associated with its AI expansion strategy.

Wall Street remains optimistic on long-term prospects

Despite concerns surrounding the debt raise and valuation, several analysts remain highly bullish on SpaceX's prospects.

The Zephirin Group issued a positive trading call earlier this week, citing an "underappreciated supply-demand imbalance." The firm noted that only about 640 million shares are currently available for trading, which may not satisfy demand from more than 300 index-tracking funds seeking exposure to the company.

Zephirin believes shares can reach $310 while that imbalance remains in place.

Analyst optimism increased further after Arete Research's Andrew Beale initiated coverage with a Buy rating and a $401 price target.

Beale sees substantial opportunity in the third generation of SpaceX's Starlink satellites, which are significantly more capable than previous versions.

The larger v3 satellites require deployment using Starship, the company's fully reusable rocket system that remains under development.

Beale's price target values SpaceX at approximately $5.3 trillion, equivalent to roughly 80 times estimated 2027 sales, underscoring the exceptionally high expectations investors currently have for the company's future growth.