SpaceX Is Down 40% — How Low Can It Go?

**SPEAKER_1** (0:01)
Support for the show comes from VCX, the public ticker for private tech. The US stock market started history's greatest way of a wealth creation, from factory workers in Detroit to farmers in Omaha.
Anyone can own a piece of the great American companies. But today, our most innovative companies are staying private longer, which means everyday Americans are missing out, until now. Introducing VCX, the public ticker for private tech, now available wherever you buy stocks. Visit getvcx.com for more info. That's getvcx.com. Carefully consider the investment material before investing, including objectives, risks, charges and expenses. This and other information will be found in the fund's prospectus at getvcx.com. This is a paid sponsorship.

**SPEAKER_2** (0:45)
monday.com AI agents took over my work, and I absolutely love it. Chasing deadlines, writing status reports, updating stakeholders, agents handle the daily grind down. I stay in the loop only when it matters. Create your own AI agent in minutes on monday.com.

**SPEAKER_3** (1:01)
Excuses are easy. An epic movie night, we don't have enough snacks. Dinner party with the girls, we'd have to decorate. Surprise date night, nothing to wear. But Amazon's Prime same day delivery lets you say yes before the moment slips away.
Try that new popcorn maker, order those cheeky drink glasses, get that new perfume and turn that I wish we could into an I'm so glad we did.
Visit amazon.com/prime to find millions of items delivered fast. Same day delivery, it's on prime. Available in select areas, terms apply.

**SPEAKER_1** (1:45)
If money is evil, then that building is hell.

**Ed Elson** (1:54)
Welcome to Prof G Markets. I'm Ed Elson. It is July 16th. Let's check in on yesterday's market vitals. The major indices rose after another inflation reading from the producer price index came in cooler than expected. Treasury yields fell. Brent crude had another volatile day as the US continued to strike Iran. And finally, Apple stock hit an all-time high after announcing it will integrate Alibaba's quen model into Apple Intelligence in China.
Okay, what else is happening? The largest IPO in history is officially underwater. Yesterday, SpaceX fell below its $135 IPO price for the first time, touching an all-time low of $132.75.
The stock has now dropped 40% from its peak, wiping away more than a trillion dollars in value. That downfall comes just one month after a debut that raised a record $86 billion and briefly made Elon Musk the world's first trillionaire. The new low also comes just one week after SpaceX joined the NASDAQ 100 That means that the index fund and the millions of Americans whose retirement accounts track it bought in right before a 10% decline. Also means, more importantly, my SpaceX prediction is on its way to becoming reality. On June 10th, I said this. Here is my prediction for what will happen tomorrow. As soon as it hits the market, SpaceX stock will immediately explode 25%.
However, my other prediction is that within six months, probably sooner, SpaceX stock will be cut in half. Why? Because the valuation makes no sense whatsoever. Almost two for two, we'll see. Joining us to discuss SpaceX's decline, we're speaking with Nicolas Owens, equity analyst at Morningstar. One of the few analysts who has been bearish on this stock, Nicolas, thank you for joining us on the show. Just as a reminder for our audience, you published your SpaceX research before the IPO. You valued the company at $62 per share. So even lower than where we are now, of course, just walk us through your valuation again as a reminder.

**Nicolas Owens** (4:05)
$62 is the result of three scenarios, a bull case, medium case, and a bear case and some probabilities that we assign to those. Only in the bull case do you get into the $130, $150, $160 range. The problem is that depends on so many things going right, that we think there's only a 7 percent chance of that happening. So that's where you get to a weighted average fair value of $62.
The medium case on its own is about $71 a share. I think we're in the same camp, if you will, thinking about Havsies valuation-wise.

**Ed Elson** (4:40)
Just looking at what's happened so far, so the stock, obviously it popped immediately, as I thought it would.
It continued to rise and now it's coming down. It's been pretty quick the way this has happened, especially considering the fact that it joined the NASDAQ 100 so recently. What do you make of how quickly it has started to drop back down?

**Nicolas Owens** (5:03)
I think it's a really good point. I think there's two kind of buckets that I would want to point out there. First of all, maybe working backwards, it's quick, I think partly because the flow is still so small, only four-ish percent of the company. But then on top of that, I think, and I go back and forth between thinking about the fundamentals, like what do you have to believe about AI, data centers in space, etc. Or what the margins on that might be in 10 years. And then you go to just the market, the supply and demand for the shares themselves. So both of those should drive the price.