Author: Tide Research
The market sentiment towards SpaceX has shifted within ten days of its listing. A $20 billion bond financing confirmed that the $8.57 billion IPO proceeds were not for deleveraging but for continued spending. The market's repricing speed was even faster than its initial surge on the first trading day.
Market Performance
Indexes faced overall pressure: the S&P 500 fell 0.37% to 7472.79, the Nasdaq dropped 1.32% to 26166.60, and the Dow Jones rose 0.29% to 51712.71.
SpaceX plunged 16.43% to $154.6, losing over 20% in three days, completely shedding its IPO halo. After hitting an intraday high of $225.64 on June 16, it fell below the first-day closing price of $160.95 by Monday, erasing $800 billion in market value from its peak.
The core issue lies in its financing logic. The $8.57 billion IPO proceeds had a clear destination: $6 billion for the acquisition of Cursor, with the remainder used to repay xAI bridge loans. Subsequently, SpaceX issued $20 billion in bonds to continue refinancing bridge loans. 22V Research noted that up to 44% of insider shares could flood the market cumulatively from August to September, while the current float is only 4.2%.
Micron surged 6.9% to $1,211.38, reaching a historical high. The driver was its strategic agreement with Anthropic for the long-term supply of HBM, DRAM, and solid-state drives. This deal effectively seals the long-term demand for AI infrastructure.
High-valuation tech stocks faced broad pressure: Alphabet fell over 5%, Meta dropped 2.3%, Amazon declined 4.8%, and Microsoft slid 3%. The communications sector saw its biggest single-day decline since April, nearing 4%. Caterpillar rose nearly 4%, leading the Dow. Industrial and financial stocks showed relative resilience as capital executed a clear rotation within the tech sector.
Oil prices fell to $76, hitting a new low in over three months. A U.S.-Iran framework agreement over the weekend prompted the market to price in the most optimistic scenario for the Strait of Hormuz in advance. The VIX rose to around 16, with selling pressure in high-valuation tech stocks far from fully released.
Macro & Outlook
The SpaceX story is simple: the uses of the IPO proceeds and bond financing were predetermined, with no plans for deleveraging. Morningstar analysts set the fair value at $62, making the current stock price 2.8 times the fair value, the second highest valuation within Morningstar's coverage. Oppenheimer's debt model is more direct: net debt could balloon from $13 billion to $400 billion by 2031. No one denies SpaceX's technological capabilities, but its cost of capital is rising rapidly.
The U.S.-Iran deal alleviates oil price pressures, but the reopening of the Strait of Hormuz is not as fast as imagined. Infrastructure damaged in conflict will take time to restore, shipping capacity needs to recover, inventories are depleted, and supply rebuilding requires time. The market has priced in the most optimistic scenario in advance; any negotiation delays, detailed disagreements, or subsequent conflicts could cause oil prices to rebound.
Nvidia's shareholder meeting and new architecture capacity disclosure early Wednesday, alongside Micron's earnings and May PCE data landing on Thursday, are the decisive moments of the week. If Micron can provide visibility on HBM supply through 2027, the chip sector's new highs will have support. If PCE continues to exceed expectations, high-valuation tech stocks will face further pressure.
Tide's Perspective
SpaceX's narrative shifted from "AI platform premium" to "rising financing cost" in just ten days. With a $2 trillion market cap, it continues to raise capital relentlessly. Investors are repricing not its profitability, but how long the financing story can last.
The Micron-Anthropic agreement provides a comparative case: AI demand is real and resilient, but the highest certainty lies in the infrastructure layer, not the application layer. One is burning cash to raise funds, the other is securing supply. The market's choice is clear.
SpaceX's decline drags down the entire tech sector in the short term. Be wary of any rebounds before Thursday. Progress on the U.S.-Iran deal might be a false signal, delaying but not altering the direction of the high-valuation reassessment. What truly dictates the trend are the two data points on Thursday: whether Micron's earnings provide satisfactory HBM guidance and whether PCE confirms the interest rate hike cycle is not over. The adjustment in high-valuation growth stocks has just begun, it's not about to end.
