SpaceX Stock Plunges Below IPO Price After Analyst Targets

SpaceX stock experienced a significant decline, falling below its initial public offering (IPO) price of $135 and continuing to drop towards $125. This marks a sharp reversal from its Nasdaq debut in June, which was the largest in U.S. history. Shares that had reached a peak near $211 within three days of trading have now lost nearly 60% of their value, impacting even early investors.

The downturn occurred shortly after analysts from more than a dozen banks released largely optimistic price targets for the company. These research notes, typically issued 25 days after a new issue begins trading, flooded the market in early July. The SpaceX IPO was a substantial payday for the underwriters, who collectively earned an estimated $500 million before expenses, representing a 0.66% fee on the $75 billion raised.

According to Jay Ritter, a professor at the University of Florida and an expert on IPOs, the underwriting banks calculate their net profit by subtracting expenses from their total earnings and dividing by their share allocation. Major financial institutions such as Goldman Sachs, Morgan Stanley, J.P. Morgan, Citigroup, and Bank of America were assigned approximately 85% of the shares for sale, positioning them to receive the largest portion of the underwriting fees.

The SpaceX offering involved twenty-three banks, including large firms and asset managers like Bernstein and South Korea's Mirae. However, five of these banks, including Spain's Santander and the U.K.'s Barclays, did not provide price targets or ratings. William Blair issued only an "outperform" recommendation without a specific future price forecast. The remaining seventeen banks did provide specific 12- to 18-month price forecasts.