SpaceX falls back to Earth after IPO frenzy
SpaceX shares have dropped significantly below their IPO price shortly after a highly publicized market debut. The article critiques the practice of index providers fast-tracking volatile new stocks into major indices like the Nasdaq-100.
Why it matters
The performance of SpaceX stock serves as a cautionary tale for retail investors and index providers regarding the risks of hype-driven IPOs.
SpaceX has achieved a remarkable feat: its shares have already fallen back to Earth.
Shares slipped below their $135 (€118) listing price less than a month after SpaceX’s blockbuster IPO (initial public offering), wiping more than $1 trillion from their peak market value. Demand for the much-hyped stock drove shares as high as $225 within days of going public, but it’s been downhill ever since.
SpaceX may still, as its devotees insist, transform industries from satellite communications to space infrastructure, but there is a reason Wall Street types joke that IPO stands for It’s Probably Overpriced.
Data from IPO expert Jay Ritter shows that almost half of large IPOs were trading below their IPO price three years later.
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