Why SpaceX stock is down over 2% on Friday

SpaceX SPCX shares fell more than 2% on Friday, extending a volatile stretch that has erased the stock's post-IPO gains as investors continue debating whether Elon Musk's AI and space ambitions justify one of the world's richest valuations.

The stock traded around $148, below its $150 listing price, after briefly soaring to a record closing high of $201.80 on June 16 following its blockbuster market debut.

Valuation debate intensifies

The sharp swings come as Wall Street publishes its first wave of research following SpaceX's record-setting IPO, with analysts offering differing views on the company's long-term potential.

Veteran investor Jeremy Grantham was among the most outspoken critics, describing the IPO as a potential landmark market bubble in a recent interview with Morningstar.

Grantham argued that much of SpaceX's valuation rests on aggressive assumptions about artificial intelligence despite what he described as the company's relatively weak competitive position in AI software.

He also questioned projections around orbital AI infrastructure and broader space-related opportunities outlined in the IPO prospectus, arguing they require technological advances that remain highly speculative.

Grantham said the stock could continue rising in the near term because of strong investor demand and index-related buying, but maintained that the valuation would ultimately have to be supported by fundamentals.

Musk remains bullish

Musk, however, has continued to raise expectations.

Responding to comments on X this week, the SpaceX chief executive said the company could eventually become "worth more than the rest of Earth" if it achieves its long-term goals.

The remarks add to a series of ambitious projections from Musk, who has previously argued Tesla could become more valuable than Apple and Saudi Aramco combined.

Several Wall Street firms have also outlined aggressive long-term scenarios for SpaceX, driven largely by expectations for Starlink, reusable launch systems, and future AI infrastructure businesses.

Raymond James currently has one of the Street's highest published price targets at $800 per share, while Citi's bull-case scenario values the company at roughly $12 trillion.

China narrows the gap in reusable rockets

SpaceX also faces growing competition overseas.

China on Friday successfully landed the booster stage of its reusable Long March-10B rocket, marking the country's first successful recovery of an orbital-class reusable booster.

The milestone places China's Aerospace Science and Technology Corp. alongside SpaceX and Blue Origin among the small group of organizations to demonstrate reusable rocket landing capability.

While SpaceX remains the clear global leader in reusable launch technology, China's latest achievement highlights the increasing pace of competition in the commercial space industry as governments and private companies race to lower launch costs and expand access to orbit.

Early volatility likely to continue

SpaceX's pullback follows an explosive start to life as a public company, with the stock surging more than 30% in its first few trading sessions before reversing sharply.

The combination of lofty valuation expectations, ambitious long-term projections, and limited public trading history has left the shares particularly sensitive to shifts in investor sentiment.

With Wall Street still establishing coverage and investors trying to assess the company's AI, satellite, and launch businesses under one public valuation, analysts expect trading to remain volatile in the months ahead.