Space stocks extended a multi-session selloff heading into Wednesday as investors weighed growing bearish interest surrounding SpaceX’s blockbuster IPO and its $1.8 trillion valuation.
The decline followed a brutal prior session in which shares of AST SpaceMobile (NASDAQ: ASTS), Rocket Lab (NASDAQ: RKLB), Virgin Galactic (NYSE: SPCE), and Redwire (NYSE: RDW) each plunged as much as 15%.
Overnight trading offered little relief, with ASTS and RKLB each falling roughly 2%, RDW declining 3%, and SPCE sinking an additional 6%.
SpaceX’s SEC filing confirmed plans to sell 555.6 million shares at $135 per share, raising $75 billion and valuing the company at $1.77 trillion, or more than $1.8 trillion on a fully diluted basis.
The company is expected to begin formally marketing the deal Thursday, ahead of a June 11 share sale and a trading debut the following day.
Tesla influencer Sawyer Merritt noted on X that full exercise of the IPO’s overallotment option could increase the value of shares sold by $11.25 billion, with the company potentially raising upwards of $85.7 billion if demand proves strong enough.
SpaceX’s initial IPO filing briefly ignited a rally among space stocks after the company described the sector as the “largest actionable total addressable market in human history,” estimating a $28.5 trillion market spanning launch, Starlink, direct-to-cell communications, and AI infrastructure.
Tesla influencer AleXandra Merz, who posts under the handle TeslaBoomerMama on X, acknowledged the financial flexibility the raise provides but pointed to funding needs extending well beyond a single capital event, citing estimates of $235 billion in capital requirements through 2030.
Merz noted that SpaceX already carries debt estimated at $29 billion, writing: “This is normal for a company still in heavy build mode. It just means the IPO is an important milestone, not the end of the funding journey.”
She also cautioned retail investors on allocation expectations, warning: “Many will likely be disappointed with their actual allotment on June 12 — just putting that out there to help manage expectations.”
Notably absent from the SpaceX underwriting syndicate is Jefferies Financial Group, which according to Bloomberg has been approached by hedge funds seeking to explore short-selling opportunities once shares begin trading.
Jefferies’ exclusion from the underwriting group has reportedly left the firm uniquely positioned to facilitate bearish trades against SpaceX after its public debut.
The discussion around potential short bets prompted satellite communications analyst Tim Farrar to revive a longstanding bear thesis on the sector, writing on X: “‘Betting against space’ has often been the most rational approach until the last few years.”
Farrar also referenced a 2021 post by Elon Musk, in which Musk acknowledged Starlink’s financial risks, writing: “SpaceX needs to pass through a deep chasm of negative cash flow over the next year or so to make Starlink financially viable. Every new satellite constellation in history has gone bankrupt. We hope to be the first that does not.”
Short seller Jim Chanos, founder of Kynikos Associates and known for predicting Enron’s collapse, dismissed comparisons between SpaceX and Amazon’s early years, noting that Amazon was valued at roughly $19 billion at end of 2005, at approximately 2x revenue and 30x trailing EBITDA.
Chanos argued that Amazon’s early valuation assigned little worth to its future businesses, adding: “SpaceX’s expected valuation is literally the opposite of that situation.”
Despite the bearish institutional tone, retail sentiment on Stocktwits remained broadly positive, with SpaceX, ASTS, and RDW all rated “bullish” and SPCE carrying an “extremely bullish” rating with “extremely high” message volume.
Over the past year, ASTS has surged 328%, RKLB has jumped 329%, RDW has gained 25%, and SPCE has advanced 32%, though the SpaceX IPO has introduced a new and significant competitive overhang for the entire sector.
