After Space Exploration Technologies Company (NASDAQ: SPCX) shares reached a price of $135 on June 12 and then skyrocketed. In the largest initial public offering (IPO) in history, SpaceX sold shares worth $86 billion, with a valuation exceeding $2 trillion.

On the first day, the stock rose to $176.52 and then closed at $160.95. The stock continued to rise, reaching a record high of $225.64 on June 16. This pushed the stock 67.1% above its trading price. But SpaceX has since crashed on Earth again.

SpaceX loses 40%

Currently, SpaceX shares are trading at $135.27, slightly above the IPO price. This caused the market valuation to collapse from $3 trillion to $1.8 billion, with $1.2 billion evaporating. This could be the largest and fastest loss of market value of any company in history.

SpaceX stock buyers should have known that shares in Elon Musk’s ventures would be volatile, right? I suspect many people are shocked at how quickly their gains have evaporated, wiping them out since June 12. Even purchasing the stock at Wednesday’s low price of $132.15 would generate a modest 2.4% gain so far.

The real winners of SpaceX’s debut were insiders, Musk’s allies and those who bought shares well before the IPO. Additionally, more than 20 participating investment banks collected a total of $500 million in fees.

The biggest winner by far is Musk, who has achieved his most spectacular feat yet. TeslaTechnoking transformed a loss-making private company into the 7th public company listed on the US stock exchange. Although Musk only owns 42% of SpaceX stock, he controls 85% of all voting rights, giving him absolute power over the business. Abracadabra!

SpaceX’s valuation defies all investment rules. As I warned on June 9, SpaceX has minimal revenue and is operating at a loss. In 2025, SpaceX, Starlink, X and xAI revenues were $18.7 billion. Combined, these four companies lost $4.9 billion last year, with only Starlink making a profit.

Since there is no fundamentals to rely on, SpaceX’s valuation is based on hype, hope and faith. Given that future cash flow will be shockingly negative for a decade, SpaceX is promising to host a “space jam tomorrow.” However, the biggest concern for shareholders may be the issuance of corporate bonds worth $75 billion (company debt) shortly after the IPO.

This debt is currently trading near “junk” levels following the decline in SpaceX bond prices. Debt investors are notoriously conservative towards shareholders. Bondholders demand only two results: collection of all coupons (interest) and then full repayment of the loans.

As shareholder optimism has been damaged and SpaceX bond prices have fallen in equal measure, I fear for shareholders. Dark dreams of lunar bases, orbiting artificial intelligence labs, and life on Mars are little more than science fiction stories. In fact, I would caution SpaceX owners to prepare for the toughest times ahead, especially when stock lockups expire and intelligent insiders start selling shares.

I expect that in the battle between snake oil financiers and the laws of physics, the latter will win. Of course, I could be wrong, and SpaceX could announce surprisingly good progress when it releases its first results as a public company in early August.

Indeed, I expect Musk to repeat his earlier claim that SpaceX has the potential to become the largest business on Earth. But if that actually happens, this space nerd will devour his massive collection of live-streamed sci-fi novels!

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Cliff D’Arcy has no position in any of the stocks mentioned.