Elon Musk’s SpaceX had a rough patch on Wall Street. After a historic and highly anticipated public debut, the rocket and space company suffered a massive sell-off. After being extraordinarily volatile on the market for some time, the company’s value dropped by $400 billion.

SpaceX fell 16.4 percent to $154.60 Monday. The stock is now 31.5% below its post-IPO peak. This decline follows the conclusion of the company’s record-breaking $86 billion initial public offering (IPO) held on June 11 at $135 per share.

Why is SpaceX Stock Dropping?

The sudden reversal for SpaceX boils down to shifting economic conditions and aggressive central bank policies.

Rising Interest Rates

U.S. government bond yields are climbing rapidly. There is concern that the Fed will raise rates soon to combat inflation. Having high rates of return is damaging to the overly valued tech companies like SpaceX which is currently valued more than 100 times its previous year revenue. When safe government bonds are yielding more, growth stocks with high price tags are stuck in the doldrums.

The Post-IPO Cool Down

Before the launch, a large crowd of potential buyers grabbed a small number of shares. Such aggressive marketing in the lead-up to the Nokia IPO saw the share price surge to nearly $3 trillion. Experts say that the initial demand for purchase has now come to an end.

The AI Gamble and Massive Corporate Debt

SpaceX is not just a rocket company. Recently, Elon Musk integrated social media firm X and artificial intelligence startup xAI into SpaceX. This transaction placed a heavy burden on the space company for debts.

SpaceX is now required to sell $20 billion worth of bonds to repay a huge bridge loan given to them in March. Moreover, the business’s valuation is so weighty that its AI arm underpins it. This AI branch lost $6.4 billion in 2025. But Musk is hedging his bet for a huge $26.5 trillion addressable market.

SpaceX is running computer software from its Colossus 2 data center as a growth outsourcing service. It recently signed a deal with Reflection AI, following similar summer deals with Anthropic and Alphabet. However, SpaceX’s chatbot Grok has a way to go before it can catch up to the others like ChatGPT or Google Gemini.