SpaceX Stock Drop: The Cursor Deal Just
Wiped $600B — Buy or Run?
Last Thursday morning I pulled up my brokerage app and just stared at SPCX for a solid minute. A stock that had been the most exciting thing to hit Wall Street in years — maybe ever — was bleeding out. Down 10% intraday at one point. Down 20% from its peak in under 48 hours. Six hundred billion dollars gone, faster than most people can process what that number even means.
And the reason? SpaceX went out and bought an AI startup called Cursor for $60 billion, just days after pulling off the biggest IPO in stock market history. That one announcement — on top of a few other things happening at exactly the same time — was enough to spook investors badly.
If you're sitting there right now wondering what the hell happened, whether you should buy this dip, or whether SpaceX stock was always priced for perfection and this is just the beginning of something uglier — this is the piece you need to read. I'm going to walk you through exactly what went down, what it actually means, and what I think retail investors should be thinking about before touching SPCX right now.
The IPO Was Insane — and That's Actually Part of the Problem
Let me set the scene first, because the size of what happened at the IPO is important context for understanding why the drop hit so hard.
SpaceX listed on Nasdaq on June 12, 2026 at $135 a share, raising $75 billion — the largest IPO in history. I've been covering markets for a long time and I've never seen retail demand like what followed. In just three trading sessions, retail investors poured into SPCX at a pace roughly equal to what they'd put into NVIDIA, Alphabet, Amazon, Microsoft, Meta, QQQ, and SPY combined. All of them. Combined. In three days.
By June 16, shares had run from $135 all the way to $225.64 — a 67% gain — and not a single quarterly earnings report had been published yet as a public company. That's the kind of move that should make any experienced investor at least a little nervous, even if the long-term story is genuinely compelling.
Then the Cursor deal dropped. And so did the stock.
From that June 16 high to around $175 two days later, SPCX fell roughly 20%. That's $600 billion in market cap, gone. In two days. And yes, the stock is still above the IPO price — but that doesn't make the whiplash any less real for anyone who bought at $200-plus.
What Caused the SpaceX Stock Drop After the Cursor Deal?
Here's the honest answer: it wasn't just one thing. It was three things hitting at once, and the timing couldn't have been worse.
First, SpaceX announced a $60 billion all-stock deal to buy Cursor just days after the IPO — immediate dilution for anyone who bought in on the open market. Then Bloomberg reported SpaceX was also planning a $20 billion bond offering at the same time. So let's do the quick math: SpaceX raised $75 billion at IPO, then turned around and announced a $60 billion acquisition plus plans to borrow $20 billion more. The obvious question — the one institutional money managers started asking out loud — was simple. How much does this company actually need?
The third trigger was mechanical. June 17 was the first day SPCX options started trading, which gave short sellers a real way to bet against the stock for the first time. Before that, if you thought SPCX was overvalued, there wasn't much you could actually do about it. Options changed that overnight. And a lot of pent-up skepticism hit the market at once.
None of this means the company is in trouble. But it absolutely explains why the stock cracked the way it did.
What Is the Cursor Deal — and Why Did SpaceX Pay $60 Billion
for It?
If you've never heard of Cursor before this week, here's the short version. Cursor built a popular AI coding tool that helps software developers generate, edit, and review code. Think of it as a co-pilot for programmers — you describe what you want in plain English and it writes the code, finds the bugs, fixes the problems. Developers are obsessed with it.
The growth numbers are genuinely wild. Annualized revenue hit $4 billion in early June, after reaching $2 billion in February and $3 billion in late April. That's not a typo. They went from $2 billion to $4 billion in annualized revenue in about four months. That kind of growth rate is almost unheard of.
Before SpaceX came knocking, Cursor was on track to close a $2 billion funding round from Andreessen Horowitz, Thrive, and NVIDIA at a valuation above $50 billion. SpaceX paid $60 billion — more than that — and did it in stock. Microsoft looked at a deal and walked away. OpenAI made two separate approaches and got turned down. SpaceX is the one that got it done.
Why SpaceX Actually Needed This Deal
The deal is meant to help SpaceX's AI division — built around xAI, which SpaceX merged with earlier this year — catch up to the major AI labs. And here's the part that I think is really important to understand: SpaceX didn't buy Cursor because everything at xAI was going great. They bought it because xAI was struggling.
SpaceX reported a net loss of $4.9 billion for full-year 2025 — a reversal from a profitable 2024 — driven by xAI, which burned $6.36 billion in operating losses on $12.7 billion in capital expenditure. Starlink made $4.4 billion in operating profit, but the AI division wiped it out. In Q1 2026 alone, the consolidated net loss was $4.28 billion.
Starlink is a cash machine. The rocket business is real. But the AI division — the piece that justifies SpaceX trading at a valuation that puts it in the same conversation as Apple and Microsoft — has been burning money at a pace that should give any serious investor pause.
You can read our complete guide on the SpaceX and xAI merger and what it means for long-term shareholders here.
The Numbers Wall Street Is Actually Worried About
I want to spend a minute here because this is where a lot of retail investors get burned — they fall in love with the story and ignore the math.
At roughly $1.75 to $2 trillion in market cap against 2025 revenue near $18.7 billion, SPCX trades around 90 times trailing sales — while still posting a GAAP net loss. Ninety times sales. For a company losing money. Even by today's AI-era standards, that's a demanding number. There's no historical precedent for many companies sustaining that kind of multiple for long — even the best ones.
Now look, I'm not saying SpaceX is going bankrupt or that this is dot-com bubble 2.0. The business is genuinely impressive. Starlink alone is worth serious money. The launch business dominates globally. And Cursor's revenue trajectory is one of the best growth stories I've seen in years.
But here's the uncomfortable truth: at 90 times sales, you've already priced in years of perfect execution. One bad quarter — even just a slightly disappointing quarter — and this stock could drop 30% or 40% and still not look cheap. That's the math. And that's what keeps serious money managers cautious even when they like the company.
Why SPCX Is Built to Be Volatile — The Float Problem
Why the Stock Swings So Hard Both Ways
Only about 4 to 5% of SpaceX's shares are in the public float — the rest are locked up. That tiny tradable supply against enormous demand produced the explosive debut, and it cuts both ways. With so few shares actually changing hands, modest selling pressure can drop the price several percent in minutes. That's why SPCX fell as much as 10% intraday on June 18 before recovering some ground.
I like to think of it like this: imagine a neighborhood where only five houses are ever for sale at any given time. If three buyers show up, prices explode. If two owners decide to sell at once, prices crater. It's not about the overall quality of the neighborhood — it's just about the tiny number of transactions happening relative to the interest. That's SPCX right now.
The Lock-Up Expiration Nobody Is Talking About Enough
SpaceX's lock-up schedule releases insider shares in stages, with the first selling windows opening around the Q2 earnings period. This matters a lot. The people sitting on shares they got at pre-IPO prices — way below $135 — will have their first real chance to sell. When that happens, the float expands, liquidity changes, and price discovery gets a whole lot messier. History isn't kind to richly valued IPOs at lock-up expiration. It doesn't always end badly, but it's a real event risk that doesn't seem to be in most retail investors' thinking right now.
The xAI Problem Nobody Wants to Talk About
Every Single Co-Founder Left Before the IPO
I've been keeping a close eye on this for a while now and the xAI situation is the thing that concerns me most about the long-term SPCX bull case — more than the valuation, more than the Cursor dilution.
Every one of xAI's 11 original co-founders had departed before the IPO. Musk himself said publicly in March 2026 that xAI "was not built right first time around." Think about what that actually means. The AI division that SpaceX hung so much of its IPO narrative on — the thing that justifies trading at a multi-trillion dollar valuation rather than what a rocket company would actually be worth — lost its entire founding team before the stock even started trading. That's not a footnote. That's a significant question about whether the people who built the thing are around to keep building it.
SpaceX's AI division has been restructuring after running into repeated controversies, including allowing users to generate non-consensual deepfakes of women and children. Cursor, in this light, starts to look less like an aggressive growth acquisition and more like a necessary fix for a division that needed a major credibility injection. Whether $60 billion was a fair price for that fix is something Wall Street is still working out.
You can read our complete guide on the biggest risks of investing in AI stocks in 2026 here.
Should I Buy SPCX Stock After the Cursor Deal?
Why Did SpaceX Stock Fall After Buying Cursor?
The short answer: investors got spooked by how much capital SpaceX is burning through, and the Cursor deal — coming right on the heels of the IPO — made the cash burn question impossible to ignore anymore. A $60 billion all-stock acquisition announced within days of raising $75 billion, combined with a $20 billion bond plan and the launch of options trading that gave bears their first real tool to push back, created a perfect storm of selling pressure.
Is SpaceX Stock a Good Buy Right Now?
Honestly? That depends on who you are as an investor.
If you have a genuinely long time horizon — five to ten years — and you believe SpaceX will eventually monetize its AI ambitions the way it's monetized Starlink, there's a real case to be made. The core business is excellent. Cursor adds real, fast-growing revenue. And at some point, the float expands and the stock becomes more rationally priced based on actual earnings.
But if you're a retail investor who got excited by the IPO hype, bought in at $190 or $200, and is now thinking about averaging down — I'd pump the brakes. The stock is still priced for perfection at current levels. The AI division has real, unresolved questions around leadership and execution. And the lock-up expiration is coming. None of that means sell everything and never come back. But it does mean don't chase it just because it's down from the peak.
The Real Risks of Owning SPCX Stock Right Now
Risk 1 — The Valuation Still Doesn't Have Much Cushion
Even after a 20% drop from the peak, SPCX is trading at roughly 90 times trailing sales. That number is not low. It's not even medium. It's extremely high — and it means any disappointment in execution, any miss on Starlink subscriber growth, any further losses from xAI, could produce a correction that makes this week look mild by comparison. Is SpaceX stock overvalued after the IPO? At current prices, the market is betting on a future that hasn't happened yet. That's a bet, not a sure thing.
Risk 2 — The Cursor Deal Dilutes You Immediately
The $60 billion in Class A common stock SpaceX agreed to pay for Cursor represented a 3.4% dilution at the IPO valuation. On its own, that's manageable. But pair it with a $20 billion bond offering, ongoing AI infrastructure spending, and a business that's still burning billions per quarter — and the dilution math starts compounding in a way that's hard to ignore if you paid $200-plus per share.
Risk 3 — The Float Expansion Will Change Everything
Right now SPCX trades on thin air — a 4 to 5% float that amplifies every move. When lock-ups expire and insiders who bought in at fractions of the current price get to sell, the stock becomes a completely different animal. More liquid, yes. But also potentially more volatile to the downside as supply floods in.
You can read our complete guide on how IPO lock-up expirations affect stock prices — and what to watch for — here.
Key Takeaways
The SpaceX stock drop after the Cursor deal is not a simple story. It's not just one bad headline. What happened was a company that went public at a historic valuation, immediately announced a massive acquisition paid entirely in newly issued stock, simultaneously telegraphed plans to borrow $20 billion more, and did all of this before publishing a single earnings report as a public company. When options opened up and short sellers finally had a tool to use, the pressure valve released fast.
The business itself is still real. Starlink generates genuine cash. The rocket business dominates its market. Cursor is one of the fastest-growing software products in the world. None of that changed last week. What changed is that investors got a cold splash of reality about how much capital SpaceX is consuming and how far the stock had run ahead of the fundamentals.
For retail investors, the key question isn't whether SpaceX is a great company — it probably is. The question is whether SPCX at current prices already reflects that greatness, or whether there's still upside left after pricing in years of perfect execution. At 90 times sales with a multi-billion-dollar net loss and real questions around xAI's leadership and direction, the honest answer is that the margin of safety is thin. Great companies at the wrong price can be bad investments for a long time.
Position size matters here more than usual. If you believe in the long-term story, a small starter position makes sense. Betting big because the stock is down 20% from a peak it reached at an extreme — that's a different thing entirely.
Final Word
SpaceX is legitimately one of the most interesting public companies I've ever watched debut. I mean that. The Starlink business alone is remarkable. The launch dominance is real. And Cursor — whatever you think of the price paid — gives them a fast-growing AI revenue line that xAI alone couldn't provide.
But the stock isn't the company. And right now SPCX is still priced for a future that involves a lot of things going right that haven't gone right yet. The $600 billion wipeout sounds dramatic — but given where the stock started and how fast it ran, some giveback was almost inevitable. The real question is whether the bottom is in or whether there's more repricing ahead as reality sets in.
You can read our complete guide on how to evaluate an IPO stock before buying here.
What do you think — did you buy SPCX at the IPO, or are you watching from the sidelines waiting for a better entry? Drop your thoughts in the comments below. I read every single one.
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