SpaceX Drops 7% on First Day in Nasdaq 100; "Index Inclusion Priced In"

Closed Down 6.8% at $149.47
Passive Fund Inflows Fail to Lift Shares
Wall Street Recommends "Buy" with $229 Target Price

SpaceX's share price fell by nearly 7% on its first day of inclusion in the Nasdaq 100 index. Analysts say this is largely due to the recent overall decline in technology stocks, as well as expectations for the index inclusion having already been priced in.

On the 11th of last month (local time), the rocket "Starship" was seen standing by at the SpaceX launch site "Starbase" in Texas, USA. Photo by Reuters Yonhap News.

The Wall Street Journal (WSJ) reported on July 7 (local time) that SpaceX shares closed at $149.47, down 6.8% from the previous trading day. While this is still above the initial public offering (IPO) price of $135 from last month, it is below both the previous high of $200 and the opening price of $150 on its first day of trading. However, in after-hours trading, the stock rebounded by about 1%, recovering the $150 range.

With the share price dropping from the very first day of index inclusion, investors expressed disappointment. The market had expected that passive funds, such as mutual funds and exchange-traded funds (ETFs) tracking the relevant index—worth a combined $800 billion—would flow in and push the stock price higher. Jay Hatfield, CEO of Infrastructure Capital Advisors, analyzed that hedge funds and short-term traders moved in anticipation of the Nasdaq inclusion, and that the general weakness in technology stocks did not help the share price.

Since its record-setting IPO in June, SpaceX shares have shown high volatility. In particular, the recent issuance of $25 billion in corporate bonds has raised concerns among investors. Although the bonds were rated as investment-grade at the time of issuance, they have been treated on the secondary market as speculative-grade, so-called "junk bonds." The spread on the bonds maturing in 2036 (the yield premium over U.S. Treasurys) was 1.4 percentage points at issuance, but has since risen to 1.65 percentage points in the market. This indicates that investors perceive greater risk in SpaceX bonds and are demanding higher yields in trading.

However, according to Japan's Nihon Keizai Shimbun (Nikkei), optimism on Wall Street remains. According to data from the London Stock Exchange Group (LSEG), all 11 firms—including Goldman Sachs and Morgan Stanley—that issued their first investment ratings on that day gave a "buy" recommendation. Many of these firms were financial institutions involved in the June IPO underwriting, and were able to issue investment opinions as the "cooling-off period" intended to prevent undue influence on the stock price had ended. Including firms that had already issued investment opinions, the total rises to 23. Their consensus target price (the average estimate) is $229, 53% higher than the July 7 closing price of $149.47, indicating expectations for further upside.

In their new reports, these financial institutions highlighted SpaceX's communications and artificial intelligence (AI) businesses as future growth drivers. Morgan Stanley forecast that the communications business would record earnings before interest and taxes (EBIT) of $65.9 billion in 2030, 15 times higher than in 2025. For the AI business, they projected a turnaround to profitability this year, reaching $95.9 billion by 2030. Goldman Sachs and Morgan Stanley estimated that AI would account for about 70% of the company's enterprise value, while JPMorgan forecast an even higher 80%. However, Nikkei pointed out that these expectations may be somewhat premature, noting that the AI business, which is expected to become a revenue source, is currently operating at a loss.

This content was produced with the assistance of AI translation services.