SpaceX drops 10% as $20B bond plan raises AI funding concerns

SpaceX's plan to raise at least $20 billion through its first investment-grade bond offering has sparked a three-day selloff, with shares falling more than 10% Monday to extend cumulative losses past 18% since the record IPO.

"The bond sale signals a fundamental shift in SpaceX's capital strategy from equity to debt, and the market is repricing the stock to reflect the scale of AI-related spending," said Michael Leshock, an analyst at KeyBanc Capital Markets who initiated coverage with a Sector Weight rating.

The offering, managed by Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Morgan Stanley, will refinance a $20 billion bridge loan tied to SpaceX's February acquisition of xAI. The company received investment-grade ratings from Moody's (Baa1), Fitch (BBB+) and S&P (BBB), enabling cheaper borrowing across maturities of five to 30 years. SpaceX held about $101 billion in cash after its $75 billion IPO, the largest in history, but only 4.2% of total shares were available for trading on the first day.

The debt push highlights the capital intensity of SpaceX's AI expansion, which includes a $60 billion all-stock acquisition of Anysphere and contracts worth roughly $75 billion to provide computing power to Google and Anthropic. Oppenheimer analysts project the company could accumulate more than $400 billion in net debt by 2031, a sum that would more than triple Oracle's current debt load and test investor appetite for funding Elon Musk's vision.

Retail frenzy meets low float

Retail investors bought a record $405 million of SpaceX stock in the first five trading days, exceeding their combined purchases of the Magnificent Seven stocks over the same period, according to Vanda Research. The surge came despite only about 640 million shares available for trading, a supply-demand imbalance that Zephirin Group said could push the stock to $310 while it persists.

The low float amplified price swings in both directions. Shares surged more than 30% above the $135 IPO price in the first two sessions before reversing as investors weighed the scale of future capital needs. Arete Research's Andrew Beale initiated coverage with a Buy rating and a $401 price target, valuing SpaceX at roughly 80 times estimated 2027 sales — a multiple that embeds exceptionally high expectations for Starlink's third-generation satellite deployment.

Debt markets open wider

SpaceX's entry into the investment-grade bond market comes as technology companies have raised more than $300 billion of debt tied to AI since November, according to JPMorgan strategists. Nvidia's recent $25 billion bond sale drew orders exceeding three times the size of the offering, signaling strong demand for high-grade tech debt even as equity investors grow cautious.

The company's franchise in operating the Starlink broadband network and its role as the primary launch provider for NASA and the Department of Defense were cited by Moody's as factors supporting the investment-grade rating. But the ratings firm also flagged elevated governance risks because of Musk's concentrated voting power and limited independent board oversight.

SpaceX's post-IPO trajectory is being closely watched as a benchmark for Anthropic and OpenAI, both expected to go public this year at valuations around $1 trillion. If the selloff deepens, it could temper enthusiasm for those listings and prompt a broader reassessment of how much debt the AI sector can sustain.

This article is for informational purposes only and does not constitute investment advice.