SpaceX stock took another hit Thursday, sliding as much as 7% to $178. That leaves shares trading almost exactly at the volume-weighted average price of just under $180. Anyone who bought the hype in the first two days of trading is now staring at a very thin cushion—or already red.
The two-day drubbing has wiped out the euphoric pop that followed SpaceX's long-awaited IPO. The stock debuted at $160, shot to $210 in the first session, and has since bled out nearly 15% from that peak. The average buyer after the first day is now underwater or barely treading water.
The Great IPO Swindle
There's a pattern here, and it's as old as Wall Street. A hotly anticipated IPO hits the tape. The underwriters underprice it just enough to guarantee a first-day pop. Retail piles in at the top. Then the institutional sellers—the ones who got allocations at the offer price—dump their shares into the eager hands of mom-and-pop. Rinse and repeat.
SpaceX was supposed to be different. Elon Musk's rocket company was the holy grail of private market investing—the one that got away for a decade. When it finally filed, the buzz was deafening. Fidelity, Morgan Stanley, and every other big bank lined up to manage the deal. The pricing was set at $160, which felt almost charitable given the private market trades at $200+.
The average buyer after the first day is now underwater or barely treading water.
But here's the thing about the private market: those trades were thin. A few thousand shares changing hands between accredited investors at prices set by bankers who had every incentive to keep the narrative rosy. The public market is a different beast. It's millions of shares, real liquidity, and no one to prop up the price.
The Musk Factor
Elon Musk doesn't help. The man is a genius, sure, but he's also a walking volatility bomb. Every tweet, every offhand comment about Starship or Starlink or his latest obsession moves the stock. The IPO prospectus was thick with risk warnings about Musk's management style and his habit of saying things that move markets. Investors apparently thought they could handle it. They can't.
On Wednesday, Musk gave an interview where he joked about taking SpaceX private again at $420. The stock dropped 4% in ten minutes. It never recovered. Thursday's selloff was compounded by a broader tech rout—the Nasdaq down 2%—but SpaceX's decline was twice as steep.
There's also the Starlink question. The satellite internet business is the crown jewel of SpaceX's future earnings, but it's burning cash at a ferocious rate. The IPO raised $10 billion, most of which is earmarked for Starlink expansion. But competitors are coming. Amazon's Project Kuiper, OneWeb, even T-Mobile's satellite ambitions. The unit economics are still unproven. And Musk has a history of overpromising timelines.
Retail Gets the Bag
Look at the volume data. On day one, 120 million shares traded. Day two, 80 million. Yesterday, 45 million. Today, likely 30 million. The big money got out early. The average retail buyer, the one who couldn't get an allocation and had to buy on the open market, is the one holding the bag.
Robinhood, E-Trade, and Schwab all reported heavy buying from their user bases on day one. Those same users are now sitting on losses. The narrative will shift from "SpaceX is the future" to "I got caught in the hype." That's the IPO cycle. It's always the same story.
The big money got out early. The average retail buyer is the one holding the bag.
Now, I'm not saying SpaceX is a bad company. It's arguably the most important aerospace firm on the planet. It launches rockets, builds satellites, and has a legitimate shot at colonizing Mars. But that doesn't mean the stock is a buy at $178. The valuation is still absurd—north of $300 billion for a company that, after all these years, barely turns a profit on an adjusted basis.
What Comes Next
So where does the stock go from here? If history is any guide, it finds a base somewhere below the IPO price. The underwriters will step in to stabilize—they always do. But that support is temporary. After the lockup period ends, insiders will dump shares. The stock will find its true level, probably in the $140-$160 range.
For the retail buyers who jumped in at $200, that's a 20-30% loss. For the ones who bought at $180, it's a 10% haircut. The average buyer is already there. Another bad week and they're under for real.
The lesson? It's always the same. Don't buy hot IPOs on day one. Let the hype settle. Let the insiders sell. Let the stock find its footing. If you still believe in the company six months later, buy then. But patience is a virtue most investors don't have.
SpaceX may be the future of space travel. But for the average buyer post-IPO, the future looks a lot like the past: a painful lesson in market mechanics.
