SpaceX Is Down 40% — How Low Can It Go?

SUMMARY

Ed Elson and Nicolas Owens analyze SpaceX’s sharp decline below its IPO price, exploring both market dynamics and fundamental business challenges. The episode also covers New York’s statewide data center moratorium with Bradley Tusk and discusses the Treasury Department’s controversial new gold coin featuring President Trump.

MAIN POINTS

• SpaceX stock falls below its $135 IPO price, marking a 40% drop from its peak and erasing over a trillion dollars in value. [1:01]
• Analysts debate the causes of SpaceX’s rapid decline, focusing on limited share float, upcoming lockup expirations, and the impact of NASDAQ 100 inclusion. [4:01]
• Nicolas Owens discusses the potential for SpaceX’s stock to move in either direction, citing upcoming earnings, increased float, and investor sentiment as key factors. [10:01]
• New York imposes a one-year moratorium on large AI data centers to address environmental and grid concerns, sparking debate on the future of such regulations nationwide. [12:05]
• Bradley Tusk explains the bipartisan nature of AI and data center regulation, noting that both red and blue states are enacting or considering similar measures. [20:02]
• The Treasury Department announces new $1 gold coins featuring President Trump, prompting criticism and historical comparisons to other world leaders. [22:01]

DETAILED ANALYSIS

SpaceX’s dramatic decline below its IPO price has become a focal point for market watchers, with the stock dropping to $132.75—40% below its peak and undercutting the $135 IPO price set just a month prior. This reversal follows a record-setting debut that raised $86 billion and temporarily made Elon Musk the world’s first trillionaire. The timing is particularly notable, as the stock’s inclusion in the NASDAQ 100 led millions of index fund investors to buy in just before a 10% drop, highlighting the risks of large-cap additions to major indices.

Equity analyst Nicolas Owens from Morningstar, who had previously valued SpaceX at $62 per share, provided a detailed breakdown of his valuation methodology. His analysis relies on three scenarios—bull, base, and bear—with only a 7% probability assigned to the bullish outcome that would justify current or higher prices. The weighted average fair value, according to Owens, remains far below the IPO price, reflecting skepticism about the company’s long-term return on investment, especially given the competitive landscape in satellite internet and AI data infrastructure.

Owens emphasized that the rapid decline is partly due to the small public float, with only about 4% of shares available for trading, amplifying volatility as supply and demand shifts.

A critical overhang is the impending expiration of insider lockups, which will allow a significant portion of early investors and employees to sell their shares. This event is expected to increase supply and could further pressure the stock price, especially if many early stakeholders seek to realize paper gains. Owens also highlighted that the Starlink business, while currently a strong asset, faces increasing competition and could see its margins eroded if capacity gluts emerge.

The analogy to terrestrial telecoms suggests that as more players enter, the economics become less favorable, potentially undermining the long-term bullish case.

Despite the negative sentiment, Owens acknowledged that positive surprises are possible, particularly if upcoming earnings reports demonstrate robust growth or if new business agreements, such as rental deals with companies like Anthropic and Google, generate significant revenue at low marginal cost. Nevertheless, he cautioned that for the stock to recover, demand must outstrip the growing supply—a scenario that hinges on shifting investor sentiment and broader market conditions.

The episode then shifted focus to regulatory developments, with New York’s statewide moratorium on large AI data centers taking center stage. Governor Kathy Hochul’s executive order pauses new permits for major data centers for one year, aiming to address environmental, energy, and community concerns. The move reflects widespread public opposition to local data center construction, as evidenced by polling and the delay or cancellation of $130 billion in projects nationwide.

Venture capitalist and political strategist Bradley Tusk argued that such regulatory actions are driven by political calculations, as politicians respond to voter anxieties about AI and its infrastructure. Tusk outlined three main issues for data centers: energy consumption, water usage, and limited local economic benefits. He suggested that solutions exist—such as requiring data centers to provide their own power and water and contribute to community projects—but that political optics will continue to shape regulatory outcomes.

Tusk also noted that data center and AI regulation is not strictly partisan, with both red and blue states enacting or considering similar measures. The bipartisan nature of the issue underscores the broad unease about AI’s societal impact, transcending traditional political divides. The discussion concluded with a look at President Trump’s public opposition to the New York moratorium, though Tusk questioned the depth of Trump’s engagement with the underlying policy details.

Finally, the episode addressed the Treasury Department’s announcement of new $1 gold coins featuring President Trump, making him the first sitting U.S. president to appear on national currency. The move drew sharp criticism, with comparisons to authoritarian leaders who have similarly placed their images on money. The segment contextualized the coin within broader concerns about political idolatry and the erosion of institutional norms, referencing recent scandals and controversies involving Trump and his associates.

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