SpaceX shares hit a record low on Friday, closing 20% off their IPO price just six weeks ago. What makes the fall so astounding is the stock's rocket-like ascent on its debut.
Shares ended the session down 3.4% at $108.37; the intraday low is $107.01. The S&P 500 and Dow Jones Industrial Average rose 0.7% and 0.5%, respectively. Coming into Friday trading, shares were 17% below the $135 IPO price.
For investors, of course, the stock is top of mind.
CEO Elon Musk has the market to worry about and a host of technical hurdles to make SpaceX everything he wants it to be.
Musk wants SpaceX to launch its huge, fully reusable Starship rocket thousands of times a year. The ambition is incredible, so are the things that need to happen to make that a reality.
One being discussed is about the thousands of small, light, hexagonal tiles that protect Starship's upper stage from burning up on re-entry.
Starship's heat shield is based on Thermal Protection System, or TPS, technology developed for the Space Shuttle. The tiles are a silica ceramic material that can handle temperatures up to 3,000 degrees Fahrenheit.
A heat shield on any spacecraft coming back to Earth sustains some damage and needs to be inspected. One of the goals of SpaceX's recent Starship testing has been to gather data about its heat shield so the company can improve the technology and design.
Musk sounded elated earlier this month after the upper stage of Starship didn't explode when splashing down in the Indian Ocean during Starship's 13th test flight. (Explosions after testing aren't uncommon or unexpected.) That meant more heat shield data for his company.
After the test, however, some NASA scientists questioned whether TPS technology was good enough to facilitate rapid reusability, calling it a "dead end" in a LinkedIn post.
"Based on the data from the recent Starship... flight, we assert that the current thermal protection system (TPS) technologies are a dead-end, and cannot get to... full-and-rapid reusability," wrote Charles Miller, Dan Rasky, and Charles Camarda.
The system works, but the tiles need to be inspected and replaced. That means a Starship might be in a repair bay for days or weeks. It might not sound like a problem, but the goal of Starship is to cut the cost of reaching orbit by 90%-plus relative to the already-low-cost, partially-reusable Falcon 9 rocket. Part of how SpaceX keeps costs low is rapid reusability.
If SpaceX can't use a Starship as often as it plans, it needs more Starships to reach its goal of thousands of launches per year. Building more Starships to get to full capacity also means delays to building out the company's space-based communications and AI businesses.
Those delays are a stock market issue. SpaceX's trillion-dollar valuation is built on rapid revenue growth, enabled by Starship.
To be sure, SpaceX knows it needs to work on its heat shield. Musk has posted about it on X many times over the years.
The company's record of improving rocket technology is unparalleled. Investors might assume the company will get it right again, and SpaceX will surely improve its heat shield tech, but investors should still pay close attention to thermal protection issues.
The heat shield probably hasn't sent shares down. Investors appear worried about valuation and more stock becoming available to trade when IPO-related lockups for early investors expire.
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