SpaceX closes below IPO prices, less than a month later

The biggest IPO ever just went underwater: SpaceX shares broke below their USD 135 IPO price for the first time yesterday, falling as much as 2.9% to USD 132.15, a month after the rocket, satellite, and AI company raised a record USD 86 bn in its June debut, Bloomberg reports. The stock is now down some 40% from its 16 June peak of USD 225.64, after surging nearly 50% in its first three days of trading and then shedding a quarter of its value over the next three sessions.

Some of the early froth was mechanical, not fundamental: A Nasdaq rule change let SpaceX join the Nasdaq-100 just 15 trading days after listing, pulling in an estimated USD 5.4 bn of forced index-fund buying, per Bloomberg Intelligence. Strip that out, and what remains is a market growing wary of a SpaceX focused on its xAI ambitions, with returns “too far removed from immediate cashflow,” as SLC Management's Dec Mullarkey put it.

The knock-on for the AI listings queue: OpenAI and Anthropic have both confidentially filed, CNBC reported. The three listings were estimated back in June at a whopping USD 3.6 tn to US exchanges. A listing this size trading below issue complicates pricing for everyone behind it, though it could equally push capital-hungry AI labs to sprint for the window before it narrows, Reuters noted.

The sell side is still bullish: More than 80% of analysts rate the stock a buy, with an average target near USD 238, roughly 78% above current levels. Much of that coverage landed only after the quiet period ended for banks that worked on the IPO.

Why this matters for us

Gulf sovereign capital was all over this book. The Public Investment Fund and the Kuwait Investment Authority each reportedly placed orders of USD 1-5 bn, with the Qatar Investment Authority also in for a sizable allocation. All in all, the book ran roughly 4x oversubscribed at some USD 250 bn in orders.

The Gulf’s pre-IPO exposure runs deeper still: PIF-backed Humain put USD 3 bn into xAI’s Series E in February, a stake that converted into SpaceX shares after the merger. Kingdom Holding’s rolled-over X position became SpaceX stock the same way, while Abu Dhabi’s MGX, Alpha Dhabi, IHC, and the Oman Investment Authority all hold direct or indirect positions.

What’s next

Starship Flight 13 launches today, and a successful flight could be a catalyst, UBS said, holding a USD 210 target for SpaceX. The bigger date is SpaceX’s first earnings report in the coming weeks, which triggers the first lockup expiries. That’s when the Gulf’s pre-IPO holders — Humain, Kingdom Holding, and the rest — face their first real decision: hold, or take what’s left of the gain.

MARKETS THIS MORNING-

Asian stock markets opened lower as renewed regional hostilities and a selloff in semiconductor shares pushed equities lower. South Korea’s Kospi is down over 6.5%, and Japan’s Nikkei is trailing behind (-3.1%). Investor sentiment could shift after South Korea’s central bank raised rates for the first time in over three years this morning in an effort to fight inflationary pressures — we’ll be closely watching to see how regional markets react to the news.

THE CLOSING BELL-

The DFM rose 0.4% yesterday on turnover of AED 583.3 mn. The index is down 2.2% YTD.

In the green: Emirates Reem Investments (+7.1%), Tecom (+2.1%), and Islamic Arab Ins. (+1.5%).

In the red: International Financial Advisors (-5%), Emirates REIT (-1.9%), and Dubai Taxi (-1.8%).

Over on the ADX, the index fell 0.2% on turnover of AED 930 mn. Meanwhile, Nasdaq Dubai fell 0.3%.