The market value of Elon Musk's space company SpaceX shed $400 billion (about 615 trillion won) in a single day. The drop came as expectations spread that the U.S. Federal Reserve would raise interest rates to curb inflation, shaking high-valuation technology stocks across the board, while concerns over increased fundraising mounted as SpaceX moved to issue large-scale bonds.
According to the Financial Times (FT), SpaceX shares closed at $154.60 on Monday in New York, down 16.4% from the previous trading session. That marks a roughly 31.5% decline from the intraday high of $225.64 recorded after its record-breaking initial public offering (IPO) on June 12. SpaceX extended its losing streak to three trading sessions, following declines of 4.95% on the 17th and 3.56% on the 18th.
As the stock plunged, market value fell by $400 billion in a single day. The FT analyzed it as "the second-largest single-day market value loss in U.S. stock market history." SpaceX's market value had soared to about $3 trillion intraday on the 16th, but fell to $2.03 trillion based on Monday's closing price.
SpaceX's sharp correction stems from concerns over Fed tightening. Fed Chair Kevin Warsh signaled his intent to curb upward price pressures after the Federal Open Market Committee (FOMC) meeting on the 17th. Fed members also offered a more hawkish rate outlook than expected, prompting the market to rapidly price in the possibility of a rate hike this year. As a result, U.S. Treasury yields are also showing an upward trend.
Rising rates work particularly against growth stocks like SpaceX. This is because the discount rate (interest rate) applied in converting expected future profits into present value rises. In addition, the higher cost of corporate fundraising is another factor weighing on technology stocks. When yields on ultra-low-risk U.S. Treasuries rise, the relative investment appeal of high-valuation technology stocks inevitably declines from an investor's perspective.
Against this backdrop, news that SpaceX is pursuing a corporate bond issuance of up to $20 billion is assessed to have sharply dampened investor sentiment. The funds raised in the bond market are to be used to repay a $20 billion bridge loan that Musk incurred in March in the process of merging AI startup xAI and social media platform X into SpaceX.
"Sellers have taken control again," Michael O'Rourke, chief market strategist at JonesTrading, told Bloomberg. "Investors who wanted to buy this stock appear to have mostly made their purchases in the early stages of the listing."
