SpaceX bond losses mount, stoking bubble warnings

SpaceX bond losses mount, stoking bubble warnings
SpaceX bond losses mount, stoking bubble warnings

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SpaceX has endured a bruising start to life as a publicly traded company. Shares of the Elon Musk-led aerospace and AI conglomerate closed at $153 on Thursday, June 25 — more than 24% below their record close of $201.80 and just 13% above the $135 IPO price — as investors digested the company’s decision to raise $25 billion in debt less than two weeks after completing the largest initial public offering in history. cnbc.com wsj.com morningstar.com

A Rapid Ascent and Reversal

SpaceX began trading on the Nasdaq on June 12 under the ticker SPCX, opening at $150 per share and closing its first day near $161. By the following Monday, June 15, the stock surged another 20% to close at $192.50, and it reached an all-time closing high of $201.80 during its second week of trading. cnbc.com wsj.com cnbc.com

The reversal began on June 18, when shares fell more than 6% as post-IPO enthusiasm faded. The selling accelerated the following week after SpaceX announced plans for a $20 billion investment-grade bond offering — later upsized to $25 billion after drawing nearly $90 billion in orders — to refinance costly debt tied to Musk’s acquisition of X and xAI’s operations. A three-day rout that week erased more than $600 billion in market capitalization, with the stock briefly dipping below its $150 opening-day price. aljazeera.com bloomberg.com reuters.com youtube.com cnbc.com

Debt Losses Mount, Bubble Warnings Surface

Bloomberg reported Friday that paper losses on SpaceX’s $25 billion bond offering have totaled roughly $305 million relative to benchmark Treasurys, with traders describing the widening as unusually sharp for a recent deal. bloomberg.com advisorperspectives.com

The back-to-back capital raises drew pointed criticism. Ludovic Subran, chief investment officer of Allianz, said at the Financial Times Global Insurance Summit that SpaceX raising bonds immediately after a massive equity issuance is “a prime example showing that the market is moving beyond a ‘healthy boom’ into an ‘overheated boom,’ and further into ‘bubble territory.'” en.sedaily.com ft.com

Ripple Effects Reach OpenAI

The turbulence appears to be reshaping other companies’ plans. OpenAI, which confidentially filed for a U.S. IPO earlier this year, is now leaning toward postponing its public debut until 2027, the New York Times reported Thursday, citing three people involved in deliberations. Reuters reported that the AI startup’s CFO Sarah Friar has told associates the company is targeting a valuation of up to $1 trillion but wants to wait for more favorable conditions. reuters.com nytimes.com

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