SpaceX Shares Recover After $1 Trillion Valuation Plunge
The rocket and AI firm's stock rebounded after a sharp, week-long decline that erased billions from its value and impacted founder Elon Musk's net worth.
SpaceX shares experienced a rebound Tuesday, recovering from a significant sell-off that had previously wiped more than $1 trillion from the company's valuation in a single week. The dramatic decline, which saw shares fall to $147 from a peak of $225, represented a 35% loss and reduced the company's valuation to $1.93 trillion from its high of $2.97 trillion.
The volatility proved costly for founder Elon Musk, whose personal wealth fell by an estimated $350 billion during the rout. Musk had become the world's first trillionaire following SpaceX's record-breaking initial public offering (IPO) on the Nasdaq earlier this month. According to Forbes calculations, his net worth dropped from $1.45 trillion to $1.1 trillion.
Despite the earlier slump, SpaceX shares closed Tuesday up 2.7% at $159, exceeding their IPO price of $135. This recovery occurred against a backdrop of broader market turbulence, with global technology stocks experiencing a sell-off.
Market Volatility and Contributing Factors
The downturn in technology stocks was partly attributed to concerns over high valuations and the potential for increased interest rates in the U.S. as the Federal Reserve works to control inflation. In New York, the Nasdaq composite index fell 1.5%. Chipmakers were particularly affected, with Micron down 13%, Qualcomm down 7.9%, and Nvidia down 3.6%.
Similar declines were observed in European markets, with Frankfurt's Dax benchmark down 1% and Paris's Cac index down 0.7%. London's FTSE 100 saw a slight decrease of 0.09%. In Asia, South Korea's Kospi tumbled 10%, with chip manufacturer SK Hynix down 12.5% and electronics giant Samsung down 12.2%.
Analysts pointed to SpaceX's sharp stock reversal as a factor contributing to the wider market's decline. Alex Rudolph, chief technical analyst at broker IG, noted that SpaceX's drop from its post-IPO peak marked one of the most significant reversals for a newly listed mega-cap stock and had a cascading effect on the technology sector. Daniela Hathorn, senior market analyst at Capital.com, suggested that sentiment was negatively impacted by the weakness in SpaceX's stock, attributing the move to a combination of profit-taking, reassessment of valuations, and the unwinding of highly bullish positions after a widely anticipated listing.