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SpaceX's stock has fallen below its $135 IPO price for the first time, hitting an all-time low of $132.75 and marking a 40% drop from its peak. This decline has erased over a trillion dollars in value and comes shortly after the company's inclusion in the Nasdaq 100 index.
Equity analyst Nicholas Owens from Morningstar, who was bearish on SpaceX prior to its IPO, reiterated his $62 price target for the stock. He explained that his valuation is based on a weighted average of three scenarios, with only a 7% probability assigned to the bull case that would reach higher valuations.
Nicholas Owens suggests SpaceX's quick stock price drop is partly due to its small float, with only about 4% of the company available. Upcoming earnings announcements and a significant insider sell-off are expected to further impact supply in the coming weeks.
Nicholas Owens notes that SpaceX's stock has declined even before the lock-up expirations, suggesting further downward pressure is likely as insiders gain the ability to sell their shares. He also points to potential oversupply from competitors in the satellite market, impacting Starlink's economics.
Nicholas Owens views SpaceX as an infrastructure play with uncertain AI payoffs, contrasting with bullish analyst targets. He cites Meta running out of capacity and OpenAI potentially delaying its IPO as factors that may cause investors to question the ROI of massive investments in the AI sector.
Nicholas Owens of Morningstar contrasts his firm's $62 price target for SpaceX with other analysts' higher targets, including one at $800 per share. He attributes the discrepancy to methodological differences, with Morningstar using discounted cash flow models extending to 2045, while others rely on multiples applied to future earnings.
Ed Elson and Nicholas Owens discuss the potential for SpaceX's stock to move either way due to a combination of factors. While supply pressures from upcoming lock-up expirations and potential insider selling exist, an increase in the float could also lead to new price directions depending on investor appetite.
Ed Elson anticipates SpaceX's upcoming quarterly report to be positive, citing good growth rates and potential revenue from rental agreements. However, he acknowledges that the company still faces scrutiny over its long-term AI profitability and overall valuation.
The US inflation rate dropped to an annual rate of 3.5% in June, exceeding economists' predictions. Much of this decrease was attributed to lower energy prices, influenced by a US-Iran ceasefire, but this relief may be temporary. The recent escalation of US strikes on Iranian targets has caused Brent crude to climb, potentially driving inflation upwards again.
Mark Zandi, Chief Economist at Moody's Analytics, stated that despite a recent drop, underlying US inflation remains uncomfortably high, hovering between 3% and 3.5%. He noted that the latest inflation report contained significant 'noise' and anomalies, making it difficult to draw firm conclusions.
Mark Zandi believes that a soft labor market, characterized by slow job creation and increasing slack, is putting downward pressure on wages and should eventually lower inflation. However, he cautioned that this is a gradual process that could take one to three years.
The US currently has the highest inflation rate in the G7, a situation exacerbated by its market-based energy pricing, which passes through oil price fluctuations directly to consumers. Mark Zandi suggests that a lack of competition in various industries might also be contributing to stickier inflation, as companies face less pressure to lower prices.
New Federal Reserve Chair Kevin Walsh has signaled a hawkish stance on inflation, stating that the recent CPI drop does not mean 'mission accomplished.' Walsh emphasized 'price stability' multiple times, leading investors to believe he is serious about combating inflation, which may influence future interest rate decisions.
IBM experienced its worst day of all time, plunging 25% after pre-announcing earnings that fell short of expectations. The market reacted strongly to the news, sending the stock value significantly lower.
President Trump has abandoned his proposal for a 20% fee on cargo transiting the Strait of Hormuz. This decision follows the recent US-Iran ceasefire, which had temporarily eased fears of supply disruptions in the region.
Despite joining the Nasdaq 100 and receiving overwhelmingly positive ratings from Wall Street analysts (18 out of 19 buy ratings), SpaceX shares experienced a nearly 6% decline. The stock is now down 13% over the past week and 34% from its peak, trading below its IPO opening price.
Patrick Boyle commented on typical IPO returns, noting they often jump around 18%, aligning with SpaceX's initial performance. However, he highlighted that investors who bought at market open or higher, particularly retail investors, are likely down on their investment, especially if they bought near the peak of $200.
Sebastian Mallaby expressed concern over OpenAI's financial sustainability, citing a high burn rate and the company's struggle to monetize its products effectively. He predicts a significant chance of the company either going bankrupt or being acquired.
Mallaby questioned the reported $122 billion raised by OpenAI, stating that a significant portion was conditional future promises rather than immediate funds. He suggests this tactic is an attempt to create an illusion of momentum.
Sebastian Mallaby believes OpenAI is being outmaneuvered by competitors like Google's Gemini and Anthropic. Gemini benefits from Google's established advertising business for monetization, while Anthropic is seen as stronger in enterprise applications like coding assistance and cybersecurity.
Sebastian Mallaby distinguishes between the broader AI sector and OpenAI specifically, stating he believes there's an "OpenAI bubble" but not a general AI bubble. He sees strong long-term demand for AI compute and related infrastructure as being "for real."
Sebastian Mallaby identified three key drivers of China's AI progress: strong government commitment to leadership by 2030, vast amounts of data from a digitized population, and a vibrant entrepreneurial scene. He believes the US's decentralized approach will struggle to compete.
The NATO summit in Turkey highlighted a new global arms race, with US military assets being shifted from Europe to the Middle East and Indo-Pacific. This change in US focus is compelling European NATO allies to increase their own defense spending, leading to significant deals in defense industry and counter-drone capabilities.
Investment in defense technology companies has surged, with over $19 billion raised so far this year, surpassing last year's record. This capital inflow reflects growing global insecurity and conflicts, such as the wars in Ukraine and the Middle East.
Artificial intelligence is increasingly being integrated into warfare, particularly through AI targeting systems. Experts note that while AI complements traditional weaponry, it also raises ethical questions about the involvement of tech companies in military operations and potential conflicts of interest.
The semiconductor market experienced a downturn, with the Nasdaq and S&P 500 closing lower, even as Samsung reported record-breaking earnings with revenues doubling and profits surging by 1800%. Investors appear concerned about the sustainability of growth in the chip sector.
A recent study by economists at Ravellio Labs and Ramp indicates that companies heavily investing in AI are actually increasing their headcount. Firms using AI heavily grew their employee count by 10% over two years, and entry-level hires increased by 12%.
The current global geopolitical landscape is described as more unstable than any time since World War II, with ongoing conflicts in Ukraine and the Middle East contributing to widespread insecurity. The shifting geopolitical objectives of the US also add to the unpredictability.
SpaceX has officially been included in the Nasdaq 100, a move that influences over $1.4 trillion benchmarked to the index. This inclusion happened under new, faster Nasdaq rules that significantly reduced the required trading history and removed float requirements. The rapid addition has raised questions among investors about whether the company is sufficiently proven for such a prominent index.
Michael Green, Chief Strategist at Simplify Asset Management, argues that SpaceX's inclusion in the Nasdaq 100 under relaxed rules is a 'manipulative' tactic to benefit the exchange and insiders. He criticizes the shift towards passive indexing, stating that index providers have incentives to list companies to increase listing fees and that this compromises the integrity of passive investing.
The inclusion of SpaceX in the Nasdaq 100, despite negative feedback during the comment period, highlights concerns about the integrity of passive investing. Critics like Michael Green argue that the rule changes favor specific companies and insiders, potentially undermining investor trust and exposing passive investors to risks associated with companies that might not meet traditional listing standards.
Tom Lee, co-founder of Funstrat Global Advisors, expressed a constructive view on the market for the second half of the year, citing a strong earnings revision and the potential for growth managers to chase semiconductor rallies. However, he acknowledged concerns about the quality of earnings, particularly those tied to AI companies like OpenAI and Anthropic.
Tom Lee of Funstrat Global Advisors highlighted that S&P 500 earnings consensus for 2027 has increased significantly, and the market has become cheaper on a PE basis. He attributed these tailwinds to AI and energy infrastructure builds, onshoring trends, and government infrastructure spending. However, concerns remain about the quality of these earnings.
Tom Lee noted that a significant percentage of fund managers, specifically 76% in large-cap growth and 60% in large-cap blend, are trailing their benchmarks this year. He suggests that many missed out on the semiconductor and DRAM rallies and may be chasing them in the second half.
The host expressed skepticism about current market earnings growth, citing the high Schiller PE ratio, which is approaching dot-com bubble levels. Concerns were raised about the reliance of earnings on contracts with AI companies like OpenAI and Anthropic, and how accounting standards might reflect increased stakes in private AI investments for big tech companies.
Tom Lee suggested that analyzing the Schiller P/E ratio by sector can provide a more accurate comparison, noting that the tech sector's Schiller P/E is not as extended when compared to historical data, due to changes in earnings composition. He mentioned that tech is now a much larger contributor to overall earnings compared to the late 1990s.
The Philadelphia Stock Exchange Semiconductor Index experienced its best quarter ever, rising 82% in the second quarter and achieving a 94% increase year-to-date. This rally has propelled semiconductor stocks to represent a fifth of the overall market.
Several semiconductor companies have seen extraordinary growth this year, with Western Digital up 240%, Micron up 310%, and SanDisk soaring over 700% year to date. This surge is contributing to the overall strength of the semiconductor sector.
Despite a strong overall performance, the semiconductor sector has not been without its turbulence, with chip stocks experiencing an 8% drop last week, marking their worst performance since April 2025. This suggests underlying volatility within the sector's rapid ascent.
Stacy Rasgon of Bernstein explains that AI demand is driving the semiconductor sector, with investors focusing on 'bottlenecks' as supply constraints lead to price increases. This has led to varied performance within the sector, with some 'bottlenecked' names outperforming traditional AI accelerators.
Stacy Rasgon notes that approximately 70% of the semiconductor sector's performance year to date has been driven by earnings growth, with valuation increases being less significant. This suggests that the sector's rally is supported by fundamental business improvements rather than just speculative trading.
Stacy Rasgon highlights that memory prices have significantly increased due to tight supply, leading to substantial positive earnings revisions for companies in the memory space. This trend indicates a strong demand-supply imbalance favoring memory manufacturers.
OpenAI is reportedly delaying its IPO until 2027, according to The New York Times, citing fallout from SpaceX's rocky market debut. While the company confidentially filed to go public on June 8th, executives are reportedly hitting the brakes. Meanwhile, rival AI company Anthropic is seen as racing ahead, with a 76% probability of going public this year, according to Cal Street.
Alex Heath explains that OpenAI is still working to establish the necessary finance and investor relations infrastructure for a public company. He notes that the company's chaotic nature and lack of formal processes, typical of a startup despite its valuation, present significant hurdles for an IPO. Heath suggests that OpenAI's various ventures, including potential hardware and ad strategies, add to the complexity.
Columnist Jamilu Kelly argues that Bitcoin's value is based solely on belief and speculation, asserting that its fundamental value is zero. He contends that while other markets have speculative elements tied to future performance, Bitcoin lacks any underlying asset or intrinsic value. Kelly also criticizes the concept of scarcity in the context of an unlimited number of cryptocurrencies, diminishing Bitcoin's claim to value.
Bitcoin has experienced a significant sell-off, falling from a high of around $120,000 to approximately $60,000, erasing over 18 months of gains and dropping more than 40% in the past year. Jamilu Kelly, a columnist at the Financial Times, predicts further declines, stating that Bitcoin was still $60,000 too high at its current price. He argues that the lack of a supportive crypto environment indicates a downward trend.
The major market indices saw gains, with the Dow closing above 52,000 for the first time. Comcast's stock jumped 5% following its announcement to spin off NBC Universal and Sky from its cable business. Oil prices increased due to an exchange of fire between the US and Iran over the weekend, though President Trump claimed fresh talks were set to occur, a claim denied by Tehran.
The first half of 2026 has been marked by significant market volatility, influenced by factors such as the AI boom, geopolitical tensions, and interest rate speculation. Despite an initial rise, the S&P 500 has flattened in recent months, leading to a "nervous top" sentiment among investors.
The first half of 2026 saw a substantial acceleration in AI development, accompanied by a memory chip shortage that boosted related stocks. Events like the "SAS catastrophe" triggered by new AI products from Anthropic also caused market ripples, impacting legacy software companies.
Geopolitical events, including an invasion of Venezuela and threats to invade Greenland, set a tone of uncertainty early in 2026. A subsequent conflict with Iran led to higher inflation, though a temporary resolution aimed at reopening the Straits of Hormuz provided market relief.
An analysis of the first half of 2026 indicates that an equal-weight S&P 500 index has outperformed the market cap-weighted index. This suggests that companies outside the top 10 by market capitalization have shown stronger performance.