SpaceX shares plummeted 5.05% during intraday trading on Wednesday, marking a sharp reversal after the stock's historic rally since its initial public offering last week. The decline comes as the rocket and artificial intelligence company's shares had surged approximately 50% from their $135 IPO price, briefly making it the fifth most valuable U.S. company with a market capitalization exceeding $2.6 trillion.
The sudden drop reflects growing investor concerns about excessive valuations and potential bubble territory in the technology sector. Notable investor Michael Burry, famous for predicting the 2008 financial crisis, expressed skepticism about SpaceX's near-$3 trillion valuation, noting that put options to short the stock remain prohibitively expensive. Other analysts have drawn comparisons to the meme stock era, warning that retail investor frenzy reminiscent of 2021 could signal unsustainable speculation.
Market participants appear to be engaging in profit-taking after the extraordinary rally, with the stock experiencing extreme volatility that some estimates suggest is triple that of Bitcoin. The broader technology sector also faced pressure, adding to the downward momentum for SpaceX shares as investors reassess risk exposure amid growing fears of a tech bubble formation.
