SpaceX shares fell in after-hours trading after closing below their IPO price for the first time on Thursday.
The decline came after the company’s 13th Starship test flight was aborted less than a second before liftoff.
The setback added to investor concerns as bearish bets against the stock continue to rise.
The stock dropped about 4.5% in after-hours trading after the launch was scrubbed, extending losses from the regular session when it closed at $131.11, below its June IPO price of $135.
The shares are now down roughly 19% since the company’s market debut last month.
The failed launch comes as investors closely monitor SpaceX’s progress in advancing its reusable rocket programme, which is central to its ambitions in satellite internet, lunar exploration and future artificial intelligence infrastructure.
Industry experts noted that launch delays and test failures are common during rocket development, though the timing alongside the stock’s recent decline has increased investor attention.
Last-second abort halts Starship launch
The Starship rocket was set to lift off from SpaceX’s Starbase facility in South Texas when an automatic hold was triggered during engine ignition.
The rocket’s 33 Raptor engines began firing before the system shut them down moments before launch.
“We did trigger a hold on the booster that aborted our liftoff as we were starting to light those Raptor engines,” SpaceX spokesperson Dan Huot said during the company’s livestream.
Chief Executive Elon Musk later confirmed that the launch had been halted because several engines failed to start properly.
“Some of the engines didn’t start, triggering an automatic launch abort,” Musk wrote on X.
“To be confident of a good flight, 2 Raptors will be removed & replaced. The most probable launch timing is early next week.”
Thursday’s mission would have marked the first flight of the upgraded Starship V3 configuration since SpaceX completed the largest IPO in US history.
The test programme remains under scrutiny
The latest setback follows another imperfect Starship test in May.
Although the rocket reached space successfully, multiple engines failed to reignite during the Super Heavy booster’s landing sequence, causing it to crash into the Gulf of Mexico.
The Federal Aviation Administration subsequently ordered an investigation before clearing the vehicle for another launch earlier this week.
“The final mishap report cites the two most probable root causes for the loss of the Super Heavy booster as heat effects on propulsion system components during the ascent and erroneous engine alarm system settings,” the FAA said.
SpaceX implemented four corrective measures, including software and hardware updates, before Thursday’s planned launch.
The mission also aimed to deploy 20 next-generation Starlink satellites designed to test new communications capabilities before intentionally burning up during atmospheric re-entry.
Rising short bets add pressure
The weakness in SpaceX shares has coincided with a sharp increase in bearish positioning.
According to Ortex Technologies, investors betting against the stock are sitting on approximately $8.7 billion in unrealised profits as the shares have fallen from a post-IPO high of $225.64, Reuters reported.
“SpaceX has been a rollercoaster for the short sellers, and it has ended up firmly in their favor,” Ortex co-founder Peter Hillerberg said.
“Rather than take profits, the bears kept adding the whole way down.”
Nearly 49% of the company’s tradable shares are now on loan to short sellers, according to Ortex, creating the potential for heightened volatility.
The research firm estimates that every $1 move in SpaceX shares represents more than $300 million in gains or losses for bearish investors.
Much of the recent pressure reflects broader concerns about expensive technology valuations and debt-funded artificial intelligence investments.
Analysts remain divided on valuation
The stock’s decline has prompted debate over whether the recent correction presents a buying opportunity.
Former hedge fund manager Whitney Tilson argued that valuations remain stretched despite the sell-off.
“Don’t even think about bottom-fishing this one, as it still trades at 92 times trailing revenues,” Tilson wrote.
“That means it’s still nearly 10 times overvalued, given that I think a generous multiple for the stock would be 10 times revenues.”
Piper Sandler initiated coverage of SpaceX on Thursday with a Neutral rating and a $156 price target.
The brokerage said it remains positive on the company’s long-term prospects but expects near-term challenges, including staged lock-up expirations, uncertainty surrounding a potential Tesla acquisition, and the substantial capital expenditure required to develop orbital AI data centres.
The firm also noted that annual investment requirements could run into tens of billions of dollars before investors gain confidence in the company’s long-term strategy.
Despite the recent weakness, Wall Street remains broadly optimistic.
According to LSEG data, 27 of the 32 analysts covering SpaceX recommend buying the stock, while four have neutral ratings and only one maintains a sell recommendation, suggesting that most analysts continue to view the recent decline as a short-term setback rather than a change in the company’s longer-term growth outlook.
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