The $600 Billion Belly Flop: Why SpaceX Stock Is Tumbling After the Cursor Deal—and How Low It Could Go

 

 The $600 Billion Belly Flop: Why SpaceX Stock Is Tumbling After the Cursor Deal—and How Low It Could Go

**Subtitle:** *From a $225.64 euphoric peak to a $179 pullback, the rocket company just lost $600 billion in market value. Here is why the “meme stock” hype is colliding with the harsh math of dilution and debt.*

**Reading Time:** 8 Minutes | **Category:** Markets & AI

## Introduction: The Record-Breaking Debut That Just Broke

Just one week ago, SpaceX was the undisputed king of Wall Street. Its $135 IPO on June 12 was the largest in history, raising $75 billion and sending the stock on a staggering 50% surge over three sessions to an intraday peak above $225 .

Elon Musk became the world’s first trillionaire. Retail investors poured nearly $370 million into the stock in its first three days—more than four times the flow into Nvidia over the same period . The company briefly ranked fourth globally in market value, ahead of Amazon and Microsoft .

Then, the music stopped.

On June 16, SpaceX announced it would acquire AI coding startup Cursor for **$60 billion** in an all-stock deal . The market reacted swiftly. The stock fell nearly 5% on Wednesday, another 6.4% on Thursday, and has now dropped roughly 20% from its peak, wiping out more than **$600 billion** in market value .

The stock is now trading around **$179–$185**, still above its $135 IPO price, but far from the euphoric highs of Tuesday . The question on every investor’s mind is: How low could it go?

In this deep-dive, we will break down the three forces driving the selloff, analyze the bull and bear cases for the stock, and tell you what to watch next.

> **The Bottom Line Up Front:** SpaceX stock has shed $600 billion in value after the company announced a $60 billion all-stock acquisition of Cursor, diluting existing shareholders by roughly 3.4%. Morningstar has a fair value estimate of $62 per share, while Oppenheimer has raised its target to $250. The stock is caught between a valuation chasm—trading at 94 times sales while losing billions—and a supply wave from an upcoming lockup expiry and a $20 billion bond offering.

## Part 1: The Three Forces Driving the Selloff

### 1. The $60 Billion Dilution Shock

The immediate trigger for the selloff was the Cursor acquisition . SpaceX agreed to pay $60 billion in stock for the AI coding startup, which represents roughly **3.4% dilution** of the company’s IPO valuation .

For investors who bought at $135, the dilution is manageable. For those who chased the stock to $225, it is a painful reality check. The all-stock deal means that existing shareholders now own a smaller piece of the company—and the market is repricing accordingly.

### 2. The Valuation Reality Check

SpaceX was already expensive before the Cursor deal. At its IPO valuation, the company traded at roughly **67 times sales**—about three times Nvidia’s revenue multiple . After the post-IPO surge, that multiple climbed even higher.

Morningstar analysts have been skeptical from the start. They valued SpaceX at just $780 billion pre-IPO—less than half of its listing valuation—and have since lowered their fair value estimate to **$62 per share**, citing the Cursor dilution . In a best-case scenario, Morningstar says shares could reach $169 if AI revenue improves .

Jim Cramer weighed in on X (formerly Twitter), saying SpaceX “could not sustain its meme status” and that “looks like it couldn’t sustain the walk-up” .

### 3. The Supply Wave Looming

Beyond the acquisition, two supply-side pressures are building.

**First, the lockup expiry.** A significant number of insider shares will become eligible for sale in late July, potentially doubling the stock’s free float . This could create selling pressure as early investors cash out.

**Second, the bond offering.** SpaceX’s bankers are preparing to meet investors to discuss a bond offering of at least **$20 billion** . The deal would refinance a bridge loan taken out to fund the xAI acquisition and signal that the company intends to fund its AI expansion through debt, not just equity .

| Pressure Point | Details |

| :--- | :--- |

| **Cursor Dilution** | 3.4% dilution of IPO valuation |

| **Lockup Expiry** | Late July; may double free float |

| **Bond Offering** | At least $20 billion in debt |

*Sources: *

## Part 2: The Bull Case—Why Some Analysts See $250

Despite the selloff, not everyone is bearish.

### Oppenheimer’s $250 Target

Oppenheimer analyst Timothy Horan applauded the Cursor deal, raising his price target to **$250** from $190 . He argued that the acquisition is “beneficial for both sides,” giving Cursor access to SpaceX’s computing infrastructure while SpaceX gains AI technology, engineering talent, training data, and a user base of over one million developers .

“This deal is beneficial for both sides,” Horan wrote, adding that SpaceX “owns every layer of the AI stack, giving it cost and quality advantages” .

### The AI Stack Thesis

SpaceX is positioning itself as a vertically integrated AI powerhouse. It now owns:

- **Hardware:** Launch vehicles and Starlink satellites

- **Compute:** The Colossus supercomputer

- **Model:** xAI (Grok)

- **Application:** Cursor (AI coding assistant)

This vertical integration could create a moat that competitors cannot easily replicate .

### The Meme Stock Defense

Swissquote analyst Ipek Ozkardeskaya argued that SpaceX has emerged as the latest “meme stock,” where investors are buying “in the expectation that others will buy too and push the price higher” . If the retail enthusiasm returns, the stock could rebound.

| Bull Argument | Details |

| :--- | :--- |

| **Oppenheimer Target** | $250 per share |

| **AI Stack Integration** | Vertical integration across hardware, model, application |

| **Retail Enthusiasm** | Meme stock dynamics could return |

*Sources: *

## Part 3: The Bear Case—Why the Stock Could Go Much Lower

### Morningstar’s $62 Fair Value

Morningstar analysts lowered their fair value estimate to **$62 per share** after the Cursor deal . That is less than half of the IPO price and a fraction of the current trading price. The firm has consistently argued that SpaceX is “significantly overvalued” and that its market value is tied to technologies it claims are “novel and untested” .

### The Cash Burn Reality

SpaceX is losing billions. The company reported a net loss of **$4.94 billion in 2025** and another **$4.28 billion in Q1 2026** . Revenue rose 33% to $18.67 billion in 2025, but the losses are mounting as the company scales up AI infrastructure .

The AI business lost **$6.4 billion** in 2025. The rocket business is also losing money . The company has accumulated total losses of **$41.3 billion** since its founding in 2002 .

### The Valuation Professor’s Warning

Aswath Damodaran, the “Dean of Valuation” at NYU, called the **$28.5 trillion total addressable market** cited in SpaceX’s prospectus a “hallucination” during CNBC’s IPO coverage .

Veteran hedge fund manager Doug Kass, who planned to short the stock, cited research showing that companies debuting above 40 times sales underperform the market by 58% over the following three years . SpaceX was priced at approximately 94 times revenue at the IPO .

| Bear Argument | Details |

| :--- | :--- |

| **Morningstar Fair Value** | $62 per share |

| **Net Loss (2025)** | $4.94 billion |

| **Net Loss (Q1 2026)** | $4.28 billion |

| **AI Business Loss** | $6.4 billion |

| **94x Sales** | Historical underperformance |

*Sources: *

## Part 4: The “Short” Attack—Betting Against the Rocket

The options market is already pricing in further downside.

### The 15% Probability of Halving

Susquehanna analyst Chris Murphy wrote that there was a **15% chance** the stock would lose half its value over the next three months because of option trades . The options market is now allowing investors to bet against the stock for the first time.

### The Meme Stock Vulnerability

Jim Cramer’s diagnosis—that SpaceX “could not sustain its meme status”—captures the fragility of the current stock price . The early rally was driven by retail euphoria, not fundamental analysis. As that enthusiasm fades, the stock is vulnerable to a sharp reversal.

### The $20 Billion Bond Offering

The planned bond offering adds another layer of risk. If the company is taking on debt to fund AI expansion, it signals that the cash burn is not slowing down . More debt means more interest expense, which could widen the losses.

## Part 5: The Investor Playbook—How to Think About SpaceX Stock

The stock is trading at a crossroads. Here is how to think about it.

### For the Long-Term Believer

If you believe in Musk’s vision of a vertically integrated AI powerhouse, the current pullback could be a buying opportunity. The stock is still up over 30% from its IPO price, but it is off its highs . The risk is that the valuation is still stretched, and the cash burn is real.

### For the Short-Term Trader

The volatility is extreme. The options market is pricing in a 15% chance of a 50% decline . Consider defined-risk strategies if you are trading the stock.

### For the Skeptic

Morningstar’s $62 fair value is a warning. The stock is still trading at a significant premium to that estimate. If the AI revenue thesis does not materialize, the downside could be substantial.

| Strategy | Rationale | Risk Level |

| :--- | :--- | :--- |

| **Buy the Dip** | Belief in AI stack integration | High |

| **Wait for Lockup Expiry** | Potential for lower entry point | Moderate |

| **Short the Stock** | Valuation concerns, cash burn | Very High |

| **Do Nothing** | Avoid volatility | Low |

*Sources: *

## Frequently Asked Questions (FAQ)

**Q: Why did SpaceX stock drop after the Cursor acquisition?**

A: SpaceX stock dropped because the $60 billion all-stock acquisition diluted existing shareholders by roughly 3.4%. Additionally, the deal raised concerns about the company’s valuation and cash burn .

**Q: How much market value did SpaceX lose?**

A: SpaceX lost more than **$600 billion** in market value across two trading days, dropping from approximately $3 trillion to $2.37 trillion .

**Q: What is Morningstar’s fair value estimate for SpaceX?**

A: Morningstar lowered its fair value estimate to **$62 per share** following the Cursor deal, from a previous estimate of $63 . In a best-case scenario, the firm says shares could reach $169 if AI revenue improves .

**Q: What is Oppenheimer’s price target for SpaceX?**

A: Oppenheimer analyst Timothy Horan raised his price target to **$250 per share**, up from $190, following the Cursor acquisition .

**Q: Is SpaceX profitable?**

A: No. SpaceX reported a net loss of $4.94 billion in 2025 and another $4.28 billion loss in Q1 2026. The AI business lost $6.4 billion in 2025 .

**Q: What is the lockup expiry and why does it matter?**

A: The lockup expiry occurs in late July, when insider shares become eligible for sale. This could double the stock’s free float and create selling pressure .

**Q: What is the planned bond offering?**

A: SpaceX is planning a bond offering of at least $20 billion to refinance a bridge loan taken out to fund the xAI acquisition. The deal would be the company’s first investment-grade bond issuance .

**Q: Is SpaceX a meme stock?**

A: Some analysts, including Swissquote’s Ipek Ozkardeskaya, have argued that SpaceX has emerged as a meme stock, with investors buying “in the expectation that others will buy too and push the price higher” .

**Q: What did Jim Cramer say about SpaceX?**

A: Jim Cramer posted on X that SpaceX “could not sustain its meme status” and that “looks like it couldn’t sustain the walk-up” .

**Q: When will SpaceX join the S&P 500?**

A: SpaceX will not join the S&P 500 until at least June 2027, due to the index’s 12-month seasoning and profitability requirements .

## Conclusion: The $600 Billion Lesson

We started this article with a number: **$225.64**. That was SpaceX’s peak price—a moment of euphoria that briefly made the company worth nearly $3 trillion.

We end with a different number: **$62**. That is Morningstar’s fair value estimate—a reminder that, for many analysts, the stock is still wildly overvalued.

The $600 billion selloff is a lesson in the volatility of hype-driven stocks. The Cursor acquisition is a strategic bet on AI, but it comes with dilution, debt, and a burning cash pile. The bull case is compelling: SpaceX owns every layer of the AI stack. The bear case is equally compelling: the company is losing billions and trading at 94 times sales.

**For the Investor:**

Do not chase the volatility. The stock is still up over 30% from its IPO price . Wait for the lockup expiry and the first earnings report. That will tell you whether the AI thesis is real or a hallucination.

**For the Trader:**

The options market is pricing in significant volatility. Consider defined-risk strategies if you are trading the stock.

**For the Observer:**

The SpaceX story is a case study in the tension between vision and valuation. Musk is building something extraordinary. But at $2.37 trillion, the market expects extraordinary returns. The question is whether he can deliver.

**The Bottom Line:**

SpaceX stock dropped after the company announced a $60 billion all-stock acquisition of Cursor, wiping out $600 billion in market value. The stock is down roughly 20% from its peak. Morningstar has a fair value estimate of $62, while Oppenheimer has a target of $250. The lockup expiry and a planned bond offering add supply-side pressure. The stock is caught between a valuation chasm and a burning cash pile. How low it goes depends on whether the AI thesis holds—and whether the market believes the vision is worth the price.

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**#SpaceX #SPCX #ElonMusk #Cursor #AI #IPO #StockMarket #Investing #Valuation**

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*Disclaimer: This article is for informational purposes only. It does not constitute financial advice. Stock markets are volatile; always consult a licensed professional before making investment decisions.*