SpaceX's stock price is facing a critical test just weeks after its market debut. Following three straight sessions of declines, the rocket and satellite company led by Elon Musk is now just a hair's breadth away from its IPO price, severely testing market confidence in this historic offering.

The share price of SpaceX fell 2.2% on Tuesday, closing at $136.08 per share, a mere $1 above its $135 IPO price from last month. Since its post-listing peak, the stock has tumbled by roughly one-third, erasing nearly $850 billion in market value.

Falling below the offering price is not merely a numerical setback for a newly public company; it directly challenges the market narrative carefully constructed by the company and its underwriters. Causing losses for shareholders so early can lead some new listings into a prolonged slump. Compounding this, lock-up periods for insider holdings are set to expire in the coming months, which will steadily increase the supply pressure on the market.

Three-Day Slide Brings Price to IPO Level

SpaceX completed its listing on the Nasdaq on June 12, closing its first day at $160.95 and setting a record for the largest U.S. IPO by funds raised. However, the stock has faced persistent pressure since, and the recent three-day decline has pushed it below its first-day close and towards the critical $135 IPO level.

Ken Mahoney, CEO of Mahoney Asset Management, stated, "We still believe SpaceX has not found its bottom. There will be a continuous flow of new shares into the market over the coming months, and it will be crucial to watch whether demand can absorb that supply."

Bloomberg data shows that, excluding special purpose acquisition companies, the overall weighted average return for 2026 U.S. IPOs has dropped to 5.3%, with SpaceX being one of the primary drags. The group's overall return is about half that of the S&P 500 index over the same period.

High Valuation and Unlock Pressure Pose Dual Concerns

Market concerns about SpaceX stem not only from its short-term price action but also from the dual pressures of its valuation and impending share supply.

From a valuation perspective, SpaceX currently trades at a forward price-to-sales ratio exceeding 30, placing it near the top among Nasdaq 100 constituents and only slightly below Palantir Technologies Inc. Skeptics argue this level offers insufficient safety margin for the stock price.

Simultaneously, the company faces a lengthy lock-up schedule, with insider holdings set to be released in batches over the coming months and enter the market. Ken Mahoney noted that this continuous supply release will likely weigh on the share price, especially with demand remaining uncertain.

Wall Street Remains Bullish, But Market Votes Differently

Despite the ongoing price decline, the overall stance of Wall Street analysts remains positive. According to Bloomberg-compiled data, over a dozen investment banks, including Morgan Stanley, JPMorgan Chase, and Goldman Sachs, initiated coverage with buy ratings. Currently, more than 80% of analysts recommend buying, with an average price target of $236.25, representing a potential upside of over 70% from Tuesday's closing price.

However, the divergence between market performance and analyst expectations reflects investor caution towards high-valuation new listings. A Bloomberg analysis of 30 major tech IPOs over the past 15 years shows these stocks experienced an average maximum decline of 55% from their first-day close, indicating that significant volatility early in a listing is somewhat common.

SpaceX is not the only major IPO this year to fall below its first-day closing price. Bloomberg data indicates that among the ten largest IPOs of the year, six are already trading below their first-day closing levels, showing that a record-breaking year for IPOs has also been accompanied by widespread volatility.

Approaching Break-Even May Attract Buyers, Some Investors Are Watching

Nearing the IPO price could also present a turning point. For investors who were unable to participate in the IPO, the $135 level may represent an attractive entry point.

Talley Leger, Chief Market Strategist at Wealth Consulting Group, said he chose to wait during the IPO phase, anticipating that SpaceX would subsequently be added to the Nasdaq index—his firm holds funds tracking that index. "If the decline continues, I might consider buying some individual shares because I believe in the company's vision and goals," Leger said.

SpaceX was just added to the Nasdaq 100 index last week under a fast-entry rule. Investors and underwriters will be closely watching the performance of SpaceX and the U.S. depositary receipts of South Korean chipmaker SK Hynix Inc. in the coming weeks, as both companies completed record-breaking listings within a month of each other.