Read More
Shares of Elon Musk's SpaceX slipped further on Tuesday following a three-session selloff that wiped out more than US$600 billion from the company's market value, with the highly valued technology sector on track to extend the rout.
ADVERTISEMENT
SCROLL TO CONTINUE WITH CONTENT
The rocket and AI company's shares fell 1.9 percent to US$151.6earlier on Tuesday. The stock sank 5 percent to as much as US$146.88 — dipping below US$150, its opening price on the day of its market debut.
SpaceX's record-breaking IPO fueled a trading frenzy in its first week as a listed company, when it briefly surpassed Microsoft and Amazon in market valuation before retreating. SpaceX last had a market valuation of US$1.99 trillion.
"I'd be cautious about seeing this as a second-chance buying opportunity. The drop looks dramatic in scale, but these swings aren't unusual for a stock with such a small public float," said Nic Puckrin, cross-asset analyst and founder of Coin Bureau.
The company's shares currently stand more than 10 percent above their IPO price of US$135.
Big IPOs often face turbulence in their early days on the public market. A Reuters analysis of 50 IPOs with the highest valuations in the past five years showed investors would have been better off buying an S&P 500 index fund about three-quarters of the time than buying into a big IPO.
SpaceX also announced a bond offering earlier this week.
BROADER TECH SECTOR ALSO SELLING OFF
Meanwhile, futures tracking the tech-heavy Nasdaq 100 index dropped 3.1 percent, implying a more than 800-point fall. The index will lose US$1.15 trillion in market value if it drops 2.79 percent, according to Reuters calculations.
Chipmakers, which have emerged as some of the biggest winners of the AI trade so far this year, also clocked heavy losses. Intel and Advanced Micro Devices dropped 7.2 percent each.
Memory chipmakers — the best-performing stocks on the S&P 500 so far this year — lagged on Tuesday, with Micron Technology down 8.4 percent, SanDisk falling 9.1 percent and Western Digital losing 7.5 percent. Memory chipmakers in South Korea also recorded steep declines.
Six of the seven "Magnificent Seven" group of companies — the biggest technology stocks on Wall Street — were under pressure as investor concerns about elevated AI spending grew.
Commonly dubbed hyperscalers, these firms have committed billions to ramp up their AI infrastructures, though clearer evidence that AI products can generate returns justifying the spending remains elusive.
Lauren Hyslop, investment manager at Mattioli Woods, cited a more challenging interest‑rate backdrop and concerns about the scale of capital required to fund the next phase of AI investment among the reasons for the selloff.
Alphabet shed 2.1 percent, Amazon.com fell 0.9 percent, Tesla was down 2.7 percent, Nvidia lost 2.7 percent and Apple was 0.9 percent lower in premarket trading. The companies are set to erode a combined US$331 billion in market value, if losses hold.
Rate-sensitive technology stocks have also been hurt by expectations of tighter monetary policy under US Federal Reserve Chair Kevin Warsh, especially as recent economic data points to a resilient economy.
Microsoft was an outlier, climbing 1.3 percent, in line with a rise in software stocks like Workday and Salesforce.
Reuters
