SpaceX shares traded below their $135 initial public offering price for the first time on Wednesday, closing at $133.50 and erasing all gains for investors who participated in the largest listing in history. The stock has now fallen roughly 40% from an intraday peak of $225.64 in mid-June, a decline that has wiped out hundreds of billions of dollars in market capitalisation from a company briefly valued above $2 trillion. The drop leaves retail investors, who were allocated an unusually large 20% of the $85.7 billion IPO, facing paper losses, and has cut Elon Musk’s net worth from a post-listing high of around $1.45 trillion to an estimated $857 billion, according to Forbes.

The reversal reflects a broader rotation out of highly valued technology and artificial intelligence stocks, as investors reassess the timeline for returns on massive AI infrastructure spending. SpaceX itself lost $4.94 billion on revenue of $18.67 billion last year, and its prospectus ties future growth to unproven orbital data centres and AI services—a vision that some market participants now view with greater caution. “When a company trades at more than 100 times revenue, expectations are extremely high,” one US-based analyst noted, adding that the initial enthusiasm may have run ahead of near-term business realities.

The decline has also hit SpaceX’s bonds, issued in late June, which rank among the worst performers in investment-grade debt. The stock’s rapid inclusion in the Nasdaq 100 index, enabled by a rule change that shortened the waiting period for large capitalisations, forced passive funds to buy in, but that technical support has not halted the slide. Attention now turns to the expiry of lock-up periods that prevent early investors and employees from selling; a large tranche of shares will become eligible for sale after the company reports its first quarterly results as a public entity, expected in August, potentially adding to selling pressure.

Analysts’ consensus price target remains around $247, with a majority maintaining buy recommendations, but the breach of the IPO price has shifted the narrative. As one strategist put it, the move “raises the narrative that the stock is up on fluff, on speculation, on froth, and not on real fundamentals.” The next factual milestones are the inaugural earnings report and the 13th Starship test flight, both seen as critical for validating the company’s long-term technology bets.