SpaceX Stock Falls in Nasdaq-100 Debut as Bubble Warnings Challenge Wall Street Optimism

Key Takeaways

• SpaceX shares fell sharply on their first day as a Nasdaq-100 constituent, closing near the level where the stock began trading after its June IPO.
• The decline suggested that expected passive fund buying was not enough to offset profit-taking, valuation concerns, and broader weakness in high-growth technology names.
• Jeremy Grantham, co-founder of GMO, warned of a high probability of a major future crash for SpaceX.
• Wall Street remains divided, with many brokerages bullish on Starlink, Starship, and long-term AI infrastructure opportunities, while skeptics question the current valuation.

SpaceX's Nasdaq-100 Inclusion

SpaceX shares faced pressure after joining the Nasdaq-100 Index, a move anticipated to create additional demand from passive funds. Instead, the stock fell about 6.8% to close at $149.47, slightly below the $150 level where it began trading on June 12. Although the stock remains above its $135 IPO price, it has significantly retreated from post-listing highs above $200.

This situation illustrates that index inclusion can lead to mechanical buying but does not guarantee a sustained rally. In SpaceX's case, much of the positive sentiment may have already been priced in prior to the rebalance.

Passive Fund Demand and Selling Pressure

SpaceX's inclusion in the Nasdaq-100 was expected to trigger significant passive fund demand, with estimates suggesting around $4.3 billion in index-related buying. However, the market reaction indicated that investors were more focused on valuation and future profitability than on short-term support from ETFs and index funds. The limited public float of SpaceX's stock may leave it vulnerable to sharp price movements.

Jeremy Grantham's Valuation Warning

Jeremy Grantham issued a strong warning regarding SpaceX's valuation, stating there is at least a 90% chance of a major crash. His concerns centered on the company's valuation, ambitious long-term projects, and the broader market expectations for AI-driven productivity gains. Grantham questioned whether a company with significant losses and lofty future plans should command such a high valuation.

Wall Street's Bullish Outlook

Despite Grantham's warnings, many Wall Street analysts remain optimistic about SpaceX. Major brokerages have issued positive ratings, focusing on the company's leadership in reusable rockets and satellite communications. The bullish case primarily revolves around Starlink and Starship, with Starlink providing a clearer revenue story and Starship representing a long-term bet on lower-cost launches and deep-space missions.

Future Considerations for Traders

Traders should monitor whether SpaceX can stabilize around the $150 mark. A sustained break below this level could indicate fading post-IPO momentum, while a rebound may suggest ongoing support for the long-term growth narrative. Key upcoming catalysts include analyst revisions, index fund flow data, updates on Starlink profitability, and broader Nasdaq sentiment.