SpaceX takes on debt for AI, but a sell-off hits the market
The share price has fallen by more than 10 per cent as the group begins the placement of its first investment-grade bond – Third consecutive session of losses: over 500 billion wiped out
SpaceX is losing ground on Wall Street. On the day that Elon Musk’s space company attempts to embark on a new chapter in its financial history, its share price has fallen by over 10 per cent, confirming the cooling of enthusiasm following the massive $75 billion IPO. This marks the third consecutive session of sharp declines, with over 500 billion wiped off the market value compared to its highs.
It must be said that the shares are still well above the offering price of $135, but the market’s message seems clear: following the initial surge, investors are beginning to assess the price of Elon Musk’s ambitions.
This move comes as the banks have begun marketing the company’s first investment-grade bond issue. Bank of America, Citigroup, Goldman Sachs, JPMorgan and Morgan Stanley are organising investor calls ahead of a bond issue with maturities ranging from five to thirty years.
The deal is expected to be worth at least $20 billion, according to Bloomberg, and will primarily serve to refinance a bridge loan of a similar size. That loan accounts for the bulk of the $29.1 billion in long-term debt reported by the company. The company has, meanwhile, announced that it held approximately $100.8 billion in cash and cash equivalents as at 19 June.
The bond route seems to be a necessary step for Musk’s ambitions.
