The single biggest driver behind the SpaceX stock crash is the company’s AI division. SpaceX merged with xAI in February 2026, and according to its own S-1 filing, xAI burned $6.36 billion in operating losses on $12.7 billion in capital expenditure during 2025 alone.

That number matters because Starlink, SpaceX’s satellite internet business, generated $4.4 billion in operating profit last year. In other words, the AI division is now erasing the profit that Starlink works hard to generate. The company posted a $4.9 billion net loss for full-year 2025, a reversal from a profitable 2024, and lost another $4.28 billion in just the first quarter of 2026.

Markets initially shrugged this off during the IPO euphoria, but as the rally cooled, investors started doing the math on whether the AI bet is actually paying off yet.

There’s a structural reason the SpaceX stock crash started exactly when it did. June 17 was the first day SPCX options began trading, giving short sellers a practical way to bet against the stock for the first time since the IPO.

Before that date, as Future Fund’s Gary Black put it, SPCX “traded more like a meme stock than a fundamentals-driven company.” Without options, pessimistic investors had limited tools to express doubt. Once puts became available, that changed almost overnight.

Bloomberg reported that by the close of the first options trading session, puts made up 44% of the flow, a clear sign that some traders were already positioning for a pullback even while the stock was still climbing.

SpaceX’s own S-1 filing projected a total addressable market of $28.5 trillion, with $26 trillion of that attributed to AI opportunities. NYU professor Aswath Damodaran, widely known as the “Dean of Valuation,” didn’t hold back his assessment.

“This is a hallucination. I would be embarrassed to even put that number out,” Damodaran said, after valuing SpaceX’s equity at roughly $1.3 trillion, about 28% below the IPO price. Morningstar’s analysis echoed a similar skepticism, noting that even generous assumptions require giving SpaceX “a lot of benefit of the doubt.”

When respected independent analysts publicly question a company’s stated growth story this early after an IPO, it tends to give momentum-driven retail buyers a reason to pause, and that hesitation can snowball quickly in a thinly traded stock.

One detail that got less attention during the IPO hype but matters a lot now: Elon Musk controls roughly 82 to 85% of SpaceX’s voting power, meaning public shareholders cannot block any capital decision, whether that’s the Cursor acquisition, a new bond offering, or future spending on xAI.

This concentrated control cuts both ways. It allows SpaceX to move fast on big strategic bets without shareholder pushback, which bulls see as an advantage. But it also means that if the market disagrees with a decision, like ramping up AI spending while it’s still deeply unprofitable, there’s no real mechanism for outside investors to influence the direction.

There’s also a layer underneath this that markets initially overlooked: every one of xAI’s original 11 co-founders had departed before the IPO, and Musk himself said publicly in March 2026 that xAI “was not built right the first time around.”

Right now, only about 4% of SpaceX shares are actually available to trade. The remaining 96% of shares are locked up until December 2026, and when that supply hits the market, the thin-float dynamic that drove SPCX from $135 to $225 in three sessions could work in reverse.

There’s a nearer-term event worth watching too. SpaceX is expected to join the Nasdaq 100 around July 6, which analysts estimate could generate roughly $8 to $10 billion in passive buying from index-tracking funds. However, more rigorous modeling suggests this translates to only a 1.6% to 2.2% temporary price bump, far less than what some retail investors appear to be expecting.

SpaceX still reported $100.8 billion in cash and cash equivalents as of June 19, and announced a new debt offering aimed at refinancing a bridge loan. The company isn’t running out of money. The question the market is wrestling with is whether the current price already reflects years of flawless execution that hasn’t happened yet.