Space Exploration Technologies Corp (NASDAQ:SPCX), or SpaceX’s post-IPO honeymoon appears to be fading as shares of the aerospace and AI giant slid more than 20% from their Tuesday peak, raising fresh questions about whether the stock’s meteoric rise can continue and what the pullback means for ETFs that rushed to gain exposure.
Shares of SpaceX fell more than 6% Thursday to below $179, extending losses from the previous session and erasing roughly $620 billion in market value from its peak of nearly $3 trillion. The decline comes just days after the company briefly became the world’s fourth-largest publicly traded company, surpassing both Amazon.com Inc (NASDAQ:AMZN) and Microsoft Corp (NASDAQ:MSFT) by market capitalization, making it’s founder, Elon Musk, the world’s first trillionaire.
The pullback follows SpaceX’s announcement that it will acquire AI coding startup Cursor in a $60 billion all-stock deal, resulting in roughly 3.4% dilution for existing shareholders. The transaction prompted Morningstar to trim its fair value estimate for the stock to $62 from $63, citing dilution concerns, even as it noted stronger AI monetization could support upside.
The selloff marks a sharp reversal from the company’s euphoric debut, which saw retail investors pour nearly $370 million into SpaceX shares during its first three trading sessions—more than four times the amount invested in Nvidia Corp (NASDAQ:NVDA)over the same period, according to Vanda Research. Adding to investor caution, options trading launched this week, introducing new avenues for bearish bets. Susquehanna analyst Chris Murphy estimates a 15% chance that SpaceX could lose half its value over the next three months as options-driven volatility intensifies, reported Forbes. It is a risk that could spill over into ETFs with significant exposure to the stock.
Short SpaceX ETFs Rally As Bears Gain Traction
Nevertheless, the recent selloff has provided an early boost to a growing group of inverse ETFs designed to profit when SpaceX shares decline.
The Defiance Daily Target 2X Short SpaceX ETF (BATS:SPCQ), GraniteShares Inverse SpaceX ETF (NYSE:SNK), and Tradr 2X Short SpaceX Daily ETF (NYSE:SPCG) all surged nearly 8% on Thursday as investors sought ways to capitalize on the stock’s sharp pullback. Each ETF surged more than 3% in the after-hours trading session, Thursday.
The gains underscore how quickly sentiment around SpaceX has shifted. Just days ago, investors were piling into the newly public stock amid record retail demand and expectations that it could become the next mega-cap market leader. Now, concerns surrounding dilution from the Cursor acquisition, lofty valuation levels, and the launch of options trading are fueling demand for bearish products.
The rally in inverse funds also highlights the growing ecosystem of ETFs built around single-stock trading strategies. Leveraged and inverse ETFs tied to high-profile names such as Nvidia, Tesla Inc (NASDAQ:TSLA), and Strategy Inc (NASDAQ:MSTR) have attracted significant trading activity in recent years, and SpaceX appears to be following a similar path. With options now available and volatility increasing, these products offer traders a way to express short-term views on the stock without directly shorting shares.
For ETF issuers, the emergence of both long and short SpaceX-focused products reflects the company’s growing importance in the market. For investors, however, the strong performance of bearish ETFs this week serves as a reminder that SpaceX’s debut has entered a new phase—one driven less by IPO enthusiasm and more by questions about valuation, execution, and the sustainability of its rapid rise.
Space ETFs feel the pressure
The pullback is likely to be closely watched by investors in space-focused ETFs that quickly embraced SpaceX following its listing.
Among the funds with meaningful exposure are the ARK Space Exploration & Innovation ETF (BATS:ARKX), the Tema Space Innovators ETF (NYSE:NASA) and the Procure Space ETF (NASDAQ:UFO), each of which provide targeted access to companies involved in satellite communications, launch services, aerospace technology, and the broader space economy. While ARKX closed Thursday largely flat, UFO and NASA dipped more than 1%.
SpaceX’s size and prominence have made it difficult for thematic fund managers to ignore. For many investors, the company has become the flagship holding of the commercial space industry, meaning sharp swings in its stock price can have an outsized impact on fund performance and investor sentiment toward the sector.
For ETF investors, SpaceX’s first major correction may represent an early test of whether the company’s long-term potential can outweigh near-term valuation concerns. While the stock remains one of the market’s most closely watched names, the recent selloff suggests that dilution fears and valuation scrutiny are beginning to replace the IPO euphoria that fueled its record-breaking debut.
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