SpaceX Stock Drops 48% Yet ETFs Continue to Invest: Here’s What You Need to Know

Key Facts on SpaceX’s IPO and ETF Dynamics

Space Exploration Technologies Corp. (NASDAQ: SPCX) closed at $118.24 per share on July 23, 2023, marking a 48% drop from its all-time high of $225.64 on June 16, shortly after its IPO on June 12. Investors should note that major ETFs are likely to continue acquiring SpaceX shares, driven by their float-based weighting systems, even as the stock price declines.

SpaceX’s float is expected to increase significantly starting August 6, 2023, following the unlocking of 20% of early release eligible shares. As of June 30, nine Vanguard ETFs collectively held $6.1 billion in SpaceX shares, representing 7.1% of its initial float. Once the float becomes large enough, ETFs will shift from a float-based to a market-cap-based weighting, potentially making SpaceX a top holding in several prominent Vanguard ETFs, similar in market cap to Meta Platforms (NASDAQ: META).

In the context of ongoing market volatility, SpaceX shares are down approximately 12% from their IPO price, despite a $300 price target from Morgan Stanley. The company’s extensive valuation history in private markets, contrasted with a volatile IPO performance, suggests that investors should remain cautious about their ETF holdings involving SpaceX as this buying behavior may replicate with future IPOs like Anthropic and OpenAI.