The SpaceX stock price drop is still the big story in the market right now, and at the time of writing shares closed at $185.00 on Thursday, down 3.56 percent on the day. The stock had touched a 52-week high of $225.64 just earlier in the week, so the move down looks sharp and also a bit sudden for an IPO that had been on such a hot streak. A lot of traders are asking why is SpaceX stock dropping this fast, and the answer ties back to SpaceX stock valuation worries and a broader SpaceX stock sell-off that picked up once SpaceX announced the Cursor deal. The SpaceX stock price drop has also reopened the SpaceX stock price prediction debate, with some analysts seeing more room to fall and others calling it more of a normal cooldown.

Why Is SpaceX Stock Dropping Amid Valuation And Sell-Off Fears

The Cursor Deal And SpaceX Stock Valuation

The SpaceX stock price drop did not happen out of nowhere, since the trigger goes back to one specific announcement. SpaceX announced a $60 billion all-stock deal for Cursor on Tuesday, and that single move really got the SpaceX stock price drop going. The deal works out to close to 3.4 percent dilution against the company’s $1.77 trillion IPO valuation, which is no small number for a stock that only just went public.

Morningstar lowered its fair value estimate to $62 from $63 shortly after, and analysts pointed to the dilution as the main reason behind the SpaceX stock valuation cut. Some analysts, such as Swissquote’s Ipek Ozkardeskaya, also compare the rally to a meme stock pattern, where buyers bet that other buyers will keep showing up and push the price higher.

Oppenheimer analyst Timothy Horan had this to say:

“This deal is beneficial for both sides.”

SpaceX Stock Price Prediction: How Low Could Shares Go

Susquehanna analyst Chris Murphy put the odds at around 15 percent that SpaceX stock could lose half its value within three months once options trading opened up, which is a pretty wide swing for such a short window. Morningstar’s bear case puts a floor near $62 a share, and the best case sits closer to $169 if AI revenue from the Cursor deal comes in strong.

SpaceX issued only about 4 percent of its shares to the public at the IPO, so the float stays thin, and that thin float explains a good part of why the SpaceX stock sell-off can move the price around so much on fairly light volume. Options traders have also been watching the SpaceX stock price closely, since the contracts that opened this week make it easier to bet on more downside from here.

Also Read: Should I Buy SpaceX Stock? Wall Street Warns of a Post-IPO Drop

Where The SpaceX Stock Price Drop Goes From Here

Whether the SpaceX stock price drop turns into something longer or just a quick dip, the question of why is SpaceX stock dropping really comes down to SpaceX stock valuation against growth, and the SpaceX stock price prediction debate will likely keep going for a while yet. Shares still trade well below the $225 peak but also well above the $135 IPO price at the time of writing, so plenty of room remains for the SpaceX stock price drop to keep moving in either direction. Traders keep watching the SpaceX stock price drop for the next signal, whether that comes from fresh Cursor news or another options expiry.