SpaceX SPCX shares look set to end a three-day winning streak Wednesday, falling around 1.6% in early trading as a broader market sell-off weighed on equities.
At the time of writing, SpaceX was trading at $169.05, down around 1.6% from its previous close.
All three major US stock indexes were also in the red early Wednesday as rising Treasury yields intensified pressure across markets.
The decline came after a strong run for the stock. SpaceX shares rose 7.35% on Friday and gained another 7.63% on Monday.
The stock advanced about 2% in early trading Tuesday before ending the session 0.49% higher.
Bond rout putting equities under pressure
SpaceX shares slipped Wednesday as investors faced another sharp sell-off in the bond market.
The 10-year Treasury yield climbed to a 24-year high, while the 30-year yield also remained near multi-decade highs.
The benchmark 10-year Treasury yield rose to 5.36%, while the 30-year Treasury yield climbed around 7 basis points to 5.73%.
Higher long-term yields can weigh on risk assets as investors reassess borrowing costs and valuations.
The decline also followed three consecutive sessions of gains, leaving room for a modest correction after the stock’s recent advance.
SpaceX’s plans to raise new debt may have added another factor for investors to consider.
The $40 billion debt plan
The space and artificial intelligence company is looking to raise about $40 billion in new debt, with the proceeds intended to finance purchases of Nvidia chips for its data centers, as per the Financial Times.
The proposed financing package would include about $10 billion in bank loans and $30 billion of investment-grade debt, led by Apollo Global Management.
The transaction is expected to close in 2027.
The planned borrowing would come after a substantial increase in SpaceX’s existing debt load.
According to its latest quarterly filing, the company had $38.4 billion of debt and $1.1 billion in finance-lease liabilities as of June 30.
SpaceX also held roughly $100 billion in cash and marketable securities at the time.
The combination of a sharp rise in SpaceX shares over the previous three sessions, renewed pressure from the bond market and plans for a sizable new debt package came together Wednesday to halt the upward movement.
What had fuelled the recent rally?
After an incredible stock market debut in June, which took the stock as high as $225, SpaceX spent the next few months below the $150 mark.
That barrier was broken last Friday thanks to multiple operational successes.
Last week, SpaceX completed a full orbital test of Starship and deployed all 26 Starlink V3 satellites even though an engine outage during ascent threatened to derail plans.
The company also launched four astronauts into the International Space Station in less than eight hours and helped Google deploy its Project Suncatcher in orbit.
The bullish sentiment was further boosted by Morgan Stanley commentary on Monday.
Analyst Adam Jonas reiterated an “Overweight” rating and maintained a $300 price target, citing future potential of the company.
Helping the sentiment further, Goldman Sachs raised the stock’s 12-month price target to $230 from $220 while maintaining a “Buy” rating.
Expansion of its artificial intelligence business and its growing defense business also acted as catalysts.
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