After a hot start with its IPO two weeks ago, SpaceX stock has seen nearly all of its gains erased.
SpaceX stock has fallen for three consecutive trading days since Monday, dropping 8 percent in just one day. It now trades for less than $170 a share — about where it was the day SpaceX went public.
Elon Musk’s site inspection and AI company went public on June 12 and The highest number of IPOs in history, one that made Musk a a trillionaire. On June 16, SpaceX stock hit a high above $225. Days later, SpaceX announced that the company has acquired an AI coding agent. Shortly after the announcement of the $60 billion acquisition, SpaceX’s stock dropped and has been falling ever since.
What’s wrong with SpaceX stock?
There are a growing number of red flags in SpaceX stock that seem to be sending some investors running the other way — not to mention orange.
MSCI, a financial firm and index provider, scored SpaceX one point out of 10 in its “contradiction” category. SpaceX received an “orange flag” for this score, which indicates if the company is involved in one or more controversies.
Mashable Light Speed
Elon Musk seems to have discovered the cheat code for capitalism. The SpaceX IPO proves that.
A score of zero out of 10 and a “red flag” would have been given to SpaceX if SpaceX was found to be “directly involved in one or more ongoing cases of conflict,” according to the Financial Times. For example, Volkswagen received an MSCI red flag in 2022 after allegations of forced labor at an assembly plant in China.
What’s worse for SpaceX is that MSCI awarded the company the lowest environmental, social and governance (ESG) rating, a Triple-C ESG rating. ESG is often used by investors and funds looking for ethical, low-risk stocks – to help them avoid tobacco companies and gun manufacturers, for example.
Musk’s company “is lagging its industry based on its high exposure and failure to manage significant ESG risks,” MSCI noted. For example, SpaceX’s IPO revealed $3 billion in new gas turbines for an AI data center project in Mississippi – where the company has already been sued for operating gas turbines without an air permit.
SpaceX’s Triple-C grade is the same as that given to Russia, in the international government’s version of the MSCI rating, after the invasion of Ukraine in 2022.
MSCI’s other concerns include SpaceX’s limitations on shareholder rights, its focus on control (Musk owns 40% of the shares but 80% of the voting rights), conflicts of interest with his other companies, and the lack of independent board members.
MSCI’s ESG ratings for SpaceX may have caught Musk’s attention. Musk has criticized when Tesla was removed from the S&P 500 ESG Index in 2022 due to allegations of racism at the electric car company, and little detail of Tesla’s low-carbon strategy.
At the time, Musk called the whole ESG concept a “scam” that was “armed by fake social justice warriors” — so if history is any guide, expect a flurry of angry tweets directed at MSCI.
