SpaceX Stock Wipes Out $1.2 Trillion in Value as Major Risks Emerge

SpaceX stock price has crashed to a record low, with its market capitalization plunging by over $1.2 trillion. SPCX fell to $143 in extended hours on Friday, down by over 36% from its highest point after its IPO. This retreat may continue in the near term as competition risks emerge.

SpaceX Stock is at Risk of Rising Competition

Elon Musk’s Space Exploration Technologies launched the most successful IPO in June, raising over $85 billion. Shortly after that, the company raised another $20 billion by issuing debt. It then spent $60 billion acquiring Cursor, a top company in the AI industry.

SpaceX stock then started its strong downward trend that has erased over $1 trillion in value. Elon Musk is no longer a trillionaire, with his net worth plunging by over $400 billion.

One reason for this is that competition is rising in all of its businesses. While the company will maintain a large market share, this competition may hurt its revenue and margins in the future.

Its satellite launch business is finding competition from Rocket Lab. It’s a company that spent billions of dollars acquiring Iridium. In addition, Blue Origin is raising $10 billion at an $110 billion valuation in its goal to compete further with SpaceX.

In a major milestone last week, China managed to land a reusable rocket for the first time. This is a big deal, as it means that the country may get some international business that may have gone to SpaceX.

Meanwhile, the European Union is implementing the IRIS project that aims to have thousands of satellites in space by 2030. Together with Eutelsat OneWeb, Europe’s goal is to end reliance on Starlink, especially in warfare. If this project is successful, it will bring substantial competition to Starlink, a company that dominates the industry.

Grok Market Share Lags Gemini, ChatGPT, and Claude

Most importantly, Grok, the company’s AI chatbot, continues to lag behind its bigger competitors in market share. OpenAI’s ChatGPT has a market share of nearly 50%, while Gemini and Claude are following.

In contrast, other chatbots like Grok and Meta AI have a share of about 5%. This is important as the company is spending billions of dollars to make Grok a more competitive brand in the industry. Also, its AI business is what is causing substantial cash burn for the company.

There are also concerns about SpaceX’s valuation and its assumptions. In making a pitch to investors, the company placed its total addressable market at $30 trillion.

It’s a figure that analysts believe is highly ambitious. In a note before the IPO, Morningstar analysts warned that the company’s real value was less than $800 billion.

On the positive side, the company has achieved some major milestones. That includes inking cloud computing deals with companies like Reflection AI, Anthropic, and Google. These deals will help it supercharge its revenue, with estimates being that the annual revenue will hit $72 billion next year.

SpaceX Stock Price Analysis

The two-hour chart shows that the SPCX stock price has been in a strong sell-off this year. It is now hovering at its all-time low. It has already crashed below the crucial support level of $147.32, its lowest level on June 23rd this year.

The stock has remained below the 50-period moving average and has formed a head-and-shoulders-like pattern. Also, the Relative Strength Index (RSI) has continued falling and has moved below the neutral level of 50.

Therefore, the stock will likely continue falling as sellers target the key support of $100. This retreat will also happen as traders wait for its first earnings as a publicly traded company. That comes out in August this year.