SpaceX shares dropped 16% on Monday, marking a third consecutive day of losses and dragging the company's stock back to roughly its IPO opening price, all after a regulatory filing revealed the rocket company plans to sell billions of dollars in investment-grade bonds.
The filing, lodged with the Securities and Exchange Commission, disclosed that SpaceX intends to offer senior unsecured notes. Separate reports pegged the target size of the bond offering at approximately $20 billion. The New York Post reported that shares closed Monday at $154.60, leaving the Texas-based company with a market capitalization of $2.03 trillion, a sharp retreat from the euphoria that surrounded its record-setting initial public offering just days earlier.
For investors who piled in at the top, the arithmetic is brutal. SpaceX opened at $150 on its June 12 IPO, surged 19.6% to close at $192.45 that day, and then proceeded to give back nearly all of those gains in under two weeks. Monday's close sat barely above the IPO opening price.
SpaceX's IPO raised nearly $86 billion and immediately pushed the company's valuation above $2 trillion. The offering was described as the largest IPO ever, and it made Elon Musk the world's first trillionaire, at least on paper. Retail investors rushed in. Data from Vanda Research showed they bought $405 million worth of SpaceX shares in the first five trading sessions alone.
The frenzy went further. Vanda Research found that retail investors purchased more SpaceX stock last week than they bought across all seven Magnificent Seven stocks combined, Alphabet, Amazon, Nvidia, and the rest.
That kind of enthusiasm is flattering. It is also fragile. And when the SEC filing landed, the air came out fast.
Shares had already fallen more than 8% on Wednesday and Thursday before the U.S. market closed for Friday. Monday's 16% plunge extended the slide into a three-day rout that erased hundreds of billions of dollars in market value. The trajectory is a reminder that Musk's enormous personal wealth gains can move in both directions with startling speed.
One detail in the SEC filing jumped out: SpaceX disclosed approximately $100.8 billion in cash. For a company sitting on that kind of liquidity, the decision to borrow $20 billion raises an obvious question, why?
The answer, at least in broad terms, appears to be artificial intelligence. SpaceX merged with Musk's AI startup, xAI, in February, and the combined entity's spending has accelerated sharply. First-quarter capital expenditures hit $10.1 billion this year, with $7.7 billion of that going to AI. In the same quarter a year earlier, SpaceX spent $4.1 billion, less than half.
Annual capital expenditures reached $20.7 billion last year. The company lost nearly $5 billion over the same period. Starlink, the satellite internet division and a major government contractor, was described as SpaceX's sole profitable division in 2025.
Those numbers tell a clear story: SpaceX is burning cash at a rate that dwarfs its operating income, and the AI buildout is the primary accelerant. A $20 billion bond offering would help finance what the company frames as costly AI development and longer-term ambitions like building data centers in space.
Dan Ives, managing director at Wedbush Securities, offered context for the sell-off:
"Investors remain skittish about all these debt offerings on the Street but it's par for the course in this AI arms race. We are seeing massive debt and equity raises from Big Tech players to fund major capital expenditure buildouts over the coming years."
Ives has a point. Alphabet, Amazon, and Nvidia have all indicated this month that they would tap debt markets to finance their own AI infrastructure. SpaceX is not borrowing in isolation, it is borrowing in a market already saturated with tech-company paper. Investors who were willing to pay a premium for SpaceX equity may be less enthusiastic about a company that simultaneously asks the bond market for $20 billion.
The broader question of whether massive AI spending will ultimately justify itself hangs over the entire sector, not just SpaceX.
Scott Martin, a partner at Kingsview Wealth Management, told the Post earlier this month after the IPO:
"Investors aren't buying today's fundamentals, they're buying Elon Musk, Starlink, AI, space infrastructure and the belief that SpaceX will dominate industries that don't fully exist yet. That's exciting, but it also means expectations are getting very high."
That assessment looks prescient now. When expectations are priced into a stock at IPO, any hint of risk, even routine corporate borrowing, can trigger a correction.
The sell-off lands hardest on the retail investors who flooded into SpaceX in its opening week. These are not hedge funds with diversified portfolios and long time horizons. Many are individual investors who bought shares at or near the IPO price because they believed in Musk's vision, colonizing Mars, dominating satellite internet, building AI infrastructure in orbit.
None of those ambitions are cheap. And the SEC filing made the cost structure impossible to ignore. A company that lost nearly $5 billion last year, spent $20.7 billion on capital projects, and is now accelerating AI spending at a pace that more than doubled quarterly outlays is not a company coasting on profits. It is a company that needs capital, lots of it, and is willing to lever up to get it.
For retail investors who bought the dream, the bond filing was a reminder that dreams require balance sheets. The question now is whether the $100.8 billion cash hoard and the planned debt offering can sustain a spending rate that shows no sign of slowing. The broader debate about unsustainable spending and mounting debt applies to corporations just as surely as it does to governments.
Several important details remain unclear. The SEC filing disclosed the intent to offer senior unsecured notes but did not specify interest rates, maturities, or other terms, at least not in what has been publicly reported so far. The $20 billion figure comes from separate reports, not from the filing itself. Whether the offering has been formally priced or remains in preparation is not yet known.
Starlink's status as a major government contractor adds another layer. Government contracts provide revenue stability, but they also tie a private company's fortunes to the political winds in Washington. The filing did not detail which contracts Starlink holds or their value.
And then there is the fundamental question that hangs over every AI-related capital raise in 2025: will the spending produce returns that justify the borrowing? Alphabet, Amazon, and Nvidia are making the same bet. SpaceX is simply making it at a scale, and with a risk profile, that few public companies have attempted.
When institutions face insolvency questions, the answer usually comes down to whether income can keep pace with obligations. SpaceX has one profitable division, enormous ambitions, and a founder whose personal brand has been the stock's primary selling point.
Markets are not sentimental. They price risk. And right now, they are repricing SpaceX.
Investors who bought the ticker because they believed in Elon Musk are learning what investors always learn eventually: belief is not a balance sheet, and vision does not service debt.