SpaceX SPCX shares decline sharply post-IPO

SpaceX shares fell below its market debut price of $150 per share, wiping out $600bn in market value amid a broader tech sell-off before jumping 2.4 percent. The dip in early trading on Tuesday follows a 16 percent slump on Monday that erased $400bn in market value for the Elon Musk-led aerospace company. Shares are still 10 percent above the $135 per share initial public offering. SpaceX saw gains after its IPO debuted on June 12, catapulting CEO Elon Musk into becoming the world's first trillionaire. The company briefly surpassed Microsoft and Amazon in market value before falling to its most recent valuation of $1.9bn. The company locked in a new deal with Reflection AI on Monday for access to its Colossus 2 data centre at $150m per month. That follows a deal with Google announced earlier this month in which the tech giant would pay SpaceX $920m per month. A Reuters analysis found that of the 50 most-valued IPOs in the last five years, investors would have been better off buying S&P 500 index fund about three-quarters of the time than buying into a big IPO. However, analysts are not too worried. Michael Monaghan, partner portfolio manager at FounderETFs, told Al Jazeera that any time you see a stock sell off sharply, especially one that everyone is focused on, and then bounce, it is usually a setup for it to move higher. He said their revenue is increasing, and their balance sheet is getting better, not worse. Monaghan added that the stock has a premium valuation and a very low float, so everything is going to be magnified in both directions. The slump for SpaceX comes amid a broader sell-off in the tech sector. The tech-heavy Nasdaq Composite index tumbled 1.4 percent in morning trading, erasing $680bn in market value. Chipmakers led the declines, with six of the seven Magnificent Seven companies under pressure amid concerns about elevated AI spending. Aleksandar Tomic, associate dean for strategy, innovation and technology at Boston College, told Al Jazeera it is definitely jitters about AI. He said it is difficult to tell if this is a temporary blip or the beginning of the deflation of the AI bubble. The slump comes amid expectations of tighter monetary policy under new US Federal Reserve Chair Kevin Warsh, which is expected to maintain and possibly raise interest rates in the fall.