Has the hype around SpaceX faded?
SpaceX started the week falling almost 20% below $150. Many attribute this to a $20 billion debt offering by the company to refinance a bridge loan tied to the acquisition of xAI, maturing in September 2027.
In reality, it may have been more of a catalyst for a broader re-rating, as the stock already looked stretched relative to other mega-cap companies even at its IPO level.
Indeed, how can SpaceX, generating roughly $18.7 billion in annual revenue, be valued in a similar range to Amazon, which grew its 2025 revenue by 12% year-over-year, from $638 billion to $717 billion?
Yes, expectations of a boost from potential inclusion in the Nasdaq-100 remain in place, after which index funds would initially be forced to buy the stock. But that may already be priced in, and if ETF outflows pick up later, those same funds could eventually turn into sellers.
And where this could lead, we may have already seen a preview in South Korea, where the Kospi index dropped 10% in a single day, apparently over concerns about stretched valuations across the tech sector, including semiconductors. So it’s reasonable to expect that if SpaceX stock were to fall while part of the Nasdaq 100, the spillover into global indices could be even more pronounced.
Could this be a temporary correction?
In recent years, most drawdowns have been quickly bought back, as the overall outlook has stayed positive and a gambling environment has persisted. A priori, not much has changed in that regard, but the risks remain. For example, if the Strait of Hormuz is disrupted again and oil prices spike, inflation could return, increasing the likelihood of additional Federal Reserve rate hikes before year-end — and with that, optimism could fade for longer.
For instance, Bank of America is already forecasting three Fed rate hikes this year, in September, October, and December, while Deutsche Bank expects two hikes, in September and December.
One potential winner in that sense could be the US dollar index (DXY), as higher interest rates could boost carry trades, which involve borrowing in lower-yielding currencies and rotating into higher-yielding dollar assets to capture the rate differential. Gold, on the other hand, could face headwinds, as it does not provide passive income, unlike bonds (via coupons), stocks (via dividends), or deposits.
This article was written by IL Contributors at investinglive.com.