SpaceX's stock price collapsed to a record low of just over $145 on Wednesday, falling below its initial public offering price of $150 and marking a 35% decline from its mid-June peak. The disappointing performance came less than 24 hours after the rocket company secured inclusion in the Nasdaq-100, a prestigious index of the exchange's 100 largest non-financial companies, which many investors had hoped would boost valuations instead.

The stock bounced back slightly to around $148 by press time, but the damage was substantial. Over the past five days alone, SpaceX shares have lost more than 13% of their value, signaling growing skepticism among investors about the company's financial fundamentals.

Why Is SpaceX Stock Struggling Despite Its Market Prominence?

The core issue driving SpaceX's stock decline is a fundamental disconnect between its valuation and its profitability. The company carries a nearly $2 trillion valuation while reporting no profits. In fact, SpaceX lost nearly $5 billion last year despite generating more than $18.5 billion in revenue, according to recent financial disclosures. This massive gap between what investors believe the company is worth and what it actually earns has become increasingly difficult to justify in a market that is growing more skeptical of unprofitable tech companies.

The situation has been further complicated by Elon Musk's recent merger between SpaceX and his artificial intelligence startup xAI. While the combination was intended to create synergies between space infrastructure and AI development, xAI has also been burning through billions of dollars without generating revenue, adding to investor concerns about the combined entity's path to profitability.

What External Factors Are Weighing on the Market?

SpaceX's stock troubles are not occurring in isolation. The broader market has faced significant headwinds this week, with the Trump administration effectively restarting its conflict with Iran. On Tuesday, the Treasury Department barred Iran from selling oil, causing crude oil prices to spike and creating uncertainty across multiple sectors. These macroeconomic pressures have affected the Nasdaq as a whole, making it a challenging environment for any company with a high valuation and uncertain near-term profitability.

Interestingly, SpaceX's stock decline coincided with an announcement from rival Blue Origin, owned by Amazon founder Jeff Bezos, that it was raising $10 billion at a $130 billion valuation. This marked Blue Origin's first time seeking outside funding and represents a significant validation of the commercial space industry's potential. While it remains unclear whether Blue Origin's funding announcement directly triggered SpaceX's stock decline, the timing underscores the competitive dynamics between the two companies as they race to develop spacecraft capable of returning human astronauts to the Moon for NASA.

How to Evaluate SpaceX's Long-Term Investment Potential

• Analyst Price Targets: Major investment banks have issued bullish outlooks despite current weakness. Morgan Stanley initiated coverage with an "Overweight" rating and a $300 price target, more than double the current stock price, while Deutsche Bank set a $255 target, citing SpaceX's "clear advantage" in deploying artificial intelligence infrastructure in space.
• Revenue Growth Trajectory: SpaceX generated $18.5 billion in revenue last year, demonstrating substantial top-line growth in the commercial space sector. The key question for investors is whether the company can eventually convert this revenue into profits as its operations scale.
• Competitive Positioning: SpaceX remains the dominant player in commercial spaceflight, with capabilities that Blue Origin and other competitors are still developing. The company's technological advantages in reusable rocket technology and launch frequency provide a moat against competition.

Despite the adverse conditions and current stock weakness, many Wall Street analysts remain convinced that SpaceX has a compelling long-term investment case. The disconnect between analyst price targets and current market prices suggests that either the market is being overly pessimistic about near-term prospects, or analysts are being overly optimistic about the company's ability to achieve profitability. For investors, the key challenge is determining which view is more accurate and whether SpaceX's current valuation represents a buying opportunity or a warning sign.