SpaceX selloff continues, wiping out $400B in market value

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**SPEAKER_4** (1:23)
A company just lost $400 billion in market value in a single trading session. That marks the second largest daily wipeout in history.

**SPEAKER_5** (1:32)
Right. Now, we're talking about SpaceX. The stock tumbled 16 percent during its third straight day of selling.
And right before this drop, the company's valuation had just passed Amazon and briefly touched Microsoft, which kind of leads to the core question here. How does a company erase $400 billion in value almost instantly, while simultaneously securing a multi-billion dollar deal to power artificial intelligence?

**SPEAKER_4** (2:00)
The mechanics of this initial public offering explain a large portion of that volatility. You really have to look at the sheer physics of the listing. I mean, they priced the stock at $135.
And that single action raised $75 billion from the market. To put that in perspective, absorbing $75 billion, it requires institutional investors to liquidate other positions entirely.

**SPEAKER_5** (2:19)
They have to rebalance.

**SPEAKER_4** (2:21)
Exactly. They have to rebalance entirely different sectors of their portfolios. You are redirecting an enormous amount of global liquidity into one single equity.

**SPEAKER_5** (2:32)
Which is an incredibly disruptive event for the broader market just structurally.

**SPEAKER_4** (2:36)
It is. And then the stock opened near $150. It closed its first day up 19% and eventually it peaked around $225.

**SPEAKER_5** (2:45)
That peak valuation at $225, that is what crossed the $2 trillion mark. And that brief high is what made Elon Musk the world's first trillionaire.

**SPEAKER_4** (2:54)
On paper.

**SPEAKER_5** (2:55)
Right. Entirely on paper. The math on that status is entirely tied to the theoretical value of his equity at that specific fleeting price point. It's purely a paper calculation. You multiply the number of outstanding shares he holds by the last traded price.

**SPEAKER_4** (3:10)
Which doesn't mean much in reality.

**SPEAKER_5** (3:12)
It doesn't mean there is a trillion dollars of cash sitting in an account anywhere or that the market could actually absorb a liquidation of his position at that price. If you try to sell even a fraction of that, the price would absolutely collapse.

**SPEAKER_4** (3:24)
The reality of the current pricing paints a completely different picture depending on exactly when you entered the market. The stock is sitting at $166 now. Yeah.
If you bought at the absolute peak of the frenzy, you are down nearly 25 percent.

**SPEAKER_5** (3:41)
But if you managed to get an allocation at the IPO price, which was incredibly difficult for retail investors to actually do, almost impossible for retail.

**SPEAKER_4** (3:50)
But if you did get in at 135, you are still up 23 percent. The average investor who just bought on the open market somewhere in the middle is basically flat right now.

**SPEAKER_5** (4:01)
This trajectory shouldn't be surprising to anyone who tracks how public markets digest newly listed companies of this size. If you look at the 10 largest US initial public offerings of the last few decades, they are down an average of 30 percent a year after their debut.

**SPEAKER_4** (4:16)
It's a very predictable pattern.

**SPEAKER_5** (4:17)
It is. The excitement is always heavily front loaded. You get this immense surge of retail traders and institutional index funds colliding in the first few days of trading.

**SPEAKER_7** (4:26)
Yeah.

**SPEAKER_5** (4:27)
Everyone wants a piece of the historic event.

**SPEAKER_7** (4:29)