In June 2026, Elon Musk made history by becoming the world’s first trillionaire when his company, SpaceX, went public.
There was a lot of excitement about the business, and investors eagerly awaited the public offering, expecting a large return on their investment. However, as the weeks went by, the reality proved more complex, with the share price fluctuating rapidly.
Musk lost his trillionaire status only 12 days after SpaceX went public.
The story serves as a lesson to investors about the dangers of following investment trends.
The record public offering was already oversubscribed before launching
Musk and SpaceX had already made history before shares went on sale. According to the Guardian, the business planned to offer at least $75 billion worth of shares, making it the largest public offering ever.
However, before trading opened, eager investors had placed more than $250 billion in bids.
Despite this, fears of overvaluation were already emerging. For example, investment research group Morningstar gave SpaceX shares a predicted valuation of $63. By contrast, the expected initial public offering (IPO) price was $135.
The share price reached a peak of $225 before quickly falling
Although there were concerns that the stock was overvalued, the hype around SpaceX created momentum.
The Guardian reported that, on 12 June, when SpaceX went public, the share price quickly reached $150, and then $176, before closing at $160. The company was valued at $2.1 trillion, and Elon Musk became the world’s first trillionaire.
On 16 June, a further report showed that the share price peaked at $225, and if you had been invested at this time, you would have seen healthy returns. However, your gains may have been short-lived.
The share value dipped below the IPO price just over a month after the initial offering
After the initial spike, the excitement about SpaceX cooled, and fears about overvaluation resurfaced. As a result, share prices fell and Musk quickly lost his trillionaire status.
On 15 July, the Guardian reported that the share price had dropped below the IPO price for the first time, reaching $134. This meant investors saw losses for the first time.
Those who purchased shares on the first day of trading would have been shielded from the worst. However, investors who bought in later, when the share price was more than $200, could have seen a significant loss.
The story of SpaceX demonstrates the danger of investor hype
SpaceX is a well-known company with several branches. Alongside researching and developing space travel technology, the company incorporates AI innovations and satellite broadband services.
Musk has made big promises about ushering in a new era of space travel and colonisation, driven by leaps in AI tech.
Much of the hype around the company comes from these grandiose plans. However, there is very little concrete evidence that they will come to fruition. More importantly, SpaceX is yet to show that it can deliver profits to reflect the high stock prices we saw in the first few weeks after the public offering.
This leaves investors in an uncertain position.
On 30 September, the SpaceX share price (according to Robinhood) was $149.41. This means that most will be holding losses on paper. In the future, the company could deliver on its promises, causing the stock price to rise and generate the gains that investors expected.
Yet, if SpaceX falls short, overvaluations and investor hype could lead to lasting losses.
Aim for a well-diversified portfolio instead of following the next big investment trend
Investors who put a large portion of their wealth into SpaceX are now dependent on the company living up to the hype. The excitement and herd mentality around SpaceX may have caused investors to put a disproportionate share of their portfolio into a single company, creating significant risk.
When you hear about the next big investment trend, you might be tempted to change your strategy because you fear missing out. If everybody is talking about the overnight gains they will make, it is natural that you want to benefit, too.
However, as the SpaceX example shows, following the crowd could increase your investment risk, and the “guaranteed returns” may not materialise.
That is why you may want to stick to your current plan and focus on maintaining a well-diversified portfolio instead. This might include companies like SpaceX and other tech-driven businesses, but, crucially, these will be part of a much wider collection of investments that spans multiple industries and regions.
That way, if the boom from SpaceX and other AI and tech companies sustains itself, you will benefit. But if the bubble bursts and these companies post large losses, you have stable growth from other investments to balance your portfolio.
Get in touch
If you need support with your investment portfolio, please get in touch with us at DBL Asset Management.
Email enquiries@dbl-am.com or call 01625 529499 to speak to us today.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.