SpaceX Surges Past Amazon and Microsoft in Market Value, Then Cools Amid Valuation Doubts

SpaceX has experienced a dramatic surge in its stock value, briefly surpassing tech giants Amazon and Microsoft to become the world's fourth-largest company just three days after its initial public offering (IPO). Shares jumped as much as 17 percent in early trading, reaching a high of $225, which represented a 66 percent gain since its New York listing on Friday.

This sharp increase propelled SpaceX's valuation to nearly $3 trillion, positioning it above Amazon and Microsoft. However, this valuation was not sustained, as the stock gave up most of its gains later in the day, closing up 4.9 percent at $201.99, placing it level with Amazon in terms of market capitalization.

The IPO has been a significant event for investors, with approximately £270 million invested by individuals in the United Kingdom. An investment of £2,000 in shares at the IPO price of $135 would have theoretically grown to about £3,320 at the stock's peak.

Despite the initial enthusiasm, some market analysts have expressed caution. Ipek Ozkardeskaya at Swissquote Bank characterized SpaceX's stock as "the biggest meme stock in town," suggesting the current valuation is not supported by fundamentals and is driven by speculative trading with the expectation of future price increases.

Conversely, brokerage Zephirin Group has issued a "Buy" rating, anticipating that SpaceX's fast-track inclusion into the Nasdaq 100 index could drive further demand from passive investment funds. FTSE Russell and MSCI are also expected to add the stock to their indexes later this month, which could provide additional support.

The stock market debut has also significantly boosted the wealth of co-founder Elon Musk, reportedly making him the world's first trillionaire. In a move that could bolster its artificial intelligence capabilities, SpaceX also announced a $45 billion deal to acquire Anysphere, the company behind the AI coding agent Cursor. This acquisition is expected to strengthen the xAI division, which develops the chatbot Grok.

While SpaceX briefly outranked Amazon and Microsoft, it still trails behind AI chip designer Nvidia, valued at $5.1 trillion, as well as Google-owner Alphabet and Apple. Richard Hunter at Interactive Investor noted that the SpaceX IPO "has captured the imagination of investors" and suggested it might take several days for market dynamics to stabilize.

However, concerns persist regarding SpaceX's high valuation, particularly as the company is currently loss-making. It faces substantial ongoing expenses related to building extensive data centers, both on Earth and in orbit, to support the growth of artificial intelligence technologies. Chris Beauchamp, chief market analyst at IG, highlighted the challenge of the company's large market presence, questioning the broader market's ability to withstand a potential downturn in SpaceX's stock price, a common occurrence.