Key Points

SpaceX post-IPO excitement could be fading fast.
Operating losses in its AI division may deepen further.
SpaceX will likely encounter rising competition that challenges its goals.

Space Exploration Technologies (NASDAQ: SPCX) completed the biggest IPO in history last month. The shares climbed at first yet have trended lower over recent weeks. The stock has now returned to its IPO price of $135. Several factors suggest it could slide substantially more, potentially 30 percent or greater, by 2028. Three stand out.

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1. Investor excitement may fade

Much-anticipated IPOs frequently spark strong initial demand as buyers rush in for early exposure to promising growth stories. Over time that fervor tends to cool and prices adjust toward levels supported by actual results rather than future hopes. SpaceX appears to be experiencing this shift already. Its shares have retreated 40 percent from peaks near $225 reached shortly after listing. With only weeks since the debut, further softening could occur once investors focus strictly on current performance metrics instead of long-term potential.

2. AI benefits remain distant

SpaceX views artificial intelligence as its primary growth driver and assigns it a massive addressable market of $26.5 trillion out of a total $28.5 trillion opportunity. That outlook helps justify an $1.8 trillion valuation even without steady profits. Yet the AI unit currently loses money while the firm invests heavily to build scale. In 2025 the segment posted $3.2 billion in revenue against a $6.4 billion operating loss. Continued heavy spending means near-term earnings gains are unlikely. Markets have already penalized other companies for large AI outlays lacking clear returns, and SpaceX could face similar pressure.

3. Rivals advance in core markets

SpaceX leads the space sector through reusable rocket technology and lower launch costs. It continues to push that advantage. However, Japan and China have each completed successful reusable rocket tests. While these programs may not target the same U.S. contracts, they demonstrate that SpaceX technological superiority is not unmatched. Investors could eventually apply greater weight to this reality and pressure the valuation lower.

SpaceX fair value assessment

The company possesses solid operations, promising opportunities, and cost advantages from vertical integration. Even so, an $1.8 trillion market capitalization appears excessive. Over the coming 18 months the price could move toward more balanced levels. A 30 percent drop would place the market cap near $1.26 trillion, aligning better with fundamentals assuming continued progress on key projects.

Is now the time to purchase Space Exploration Technologies shares?

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Prosper Junior Bakiny holds no positions in mentioned securities. The Motley Fool maintains no positions either and follows a standard disclosure policy.

Opinions expressed are solely those of the author and may not represent views of Nasdaq Inc.