SpaceX, Elon Musk’s rocket and artificial intelligence company, dropped below its initial public offering price of $135 on Wednesday before closing the day slightly above it, raising questions for other tech companies aiming to test the public markets.
SpaceX shares fell more than 2.5 percent in intraday trading to below the $135 price when the company went public last month, before ending the trading day at $135.27. Its I.P.O., which was the largest ever, raised $85.7 billion and suggested that investors were hungry not only for SpaceX but also for potentially large public market debuts by the A.I. companies Anthropic and OpenAI.
Yet SpaceX’s bumpy ride may have Wall Street thinking otherwise. The company’s market capitalization briefly surpassed Amazon’s and Microsoft’s last month, nearing $3 trillion after its shares reached $225.64. It is now valued at around $1.782 trillion after days of declines.
Already, OpenAI has been leaning toward holding off its public offering until next year. Sam Altman, the chief executive, pushed the company’s investment bankers and others to find a way for the start-up to be valued at $1 trillion when it goes public, up from its last private valuation of $730 billion.
SpaceX’s fluctuations were not unexpected given the exuberance among institutional and retail investors during the public offering and the relatively low number of shares available to trade. Fewer than 5 percent of the company’s outstanding shares are able to be bought and sold, and the heavy demand in the days after the I.P.O. contributed to the spike in price.
Drew Cupps, a portfolio manager at Polen Capital, which invested in SpaceX after its public offering, attributed the stock’s drop to a “reversal in investor optimism around data center spending.”
“There is nothing positive about a breach of an I.P.O. price, though it’s not a death knell either,” he said. He recounted how Facebook, now called Meta, fell below its I.P.O. price after its 2012 public offering and stayed below that threshold for about a year before soaring.
In the coming months, more SpaceX stock will become available to trade as lockup agreements — which prevent shareholders from getting rid of shares immediately after an I.P.O. — expire, allowing employees and early investors to sell their shares. More sellers and an increased supply of shares could weaken the stock price.
In an expected move, SpaceX gained expedited entry to the Nasdaq-100 index last week, essentially forcing index funds to buy up the stock. Its share price, however, did not experience a boost.
SpaceX’s falling share price follows a broader pullback in the stock market, as investors question the durability of huge bets made by A.I. companies. Shares of a group of behemoth tech stocks called the Magnificent Seven — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — fell roughly 9 percent in June.
Other recently public companies have also suffered. Cerebras, an Silicon Valley A.I. chip maker, has been trading below its I.P.O. price of $185 a share after raising $5.55 billion in May. Shares of SK Hynix, a memory chip maker in South Korea, have vacillated since raising $26.5 billion in a U.S. listing last week but are still trading above the I.P.O. price of $149.
In recent I.P.O.s, share prices rose 32 percent, on average, after the first day of trading but were down 26 percent after 12 months, J.P. Morgan analysts said in a report.
SpaceX’s stock performance after its public offering turned Mr. Musk into the world’s first trillionaire. With the decline in the rocket maker’s stock, he has lost that 13-figure net worth and is now worth around $850 billion, according to the Bloomberg Billionaires Index.
After its I.P.O., SpaceX used its ballooning stock price to close a $60 billion, all-stock deal for Cursor, a start-up that develops A.I. tools to write computer code. Speculation that Mr. Musk could also use SpaceX to acquire his electric carmaker, Tesla, which has a market valuation of $1.481 trillion, has also grown.
Joe Rennison contributed reporting from New York.
