SpaceX Stock Just Crashed — Here’s Why

a lot of the tools out there that are supposed to make your life easier just aren't great at talking to each other. That means you end up having to toggle between a dozen different apps and services just to keep the lights on. Enough of that. Now there is ODU. The all-in-one fully integrated platform that might actually help you get it all done. Thousands of businesses have made the switch. So why not you try ODU for free at ODU.com. That's ODU.com.

Feel like you're being told to wave a magic AI wand and everything will just get better. Sure, AI can chat and summarize. But what about big business problems? Like rerouting stock through a canal that won't unblock. Enterprise AI needs context for that. So Salonus provides it. The Salonus context model gives AI operational clarity. So agents know how your unique business runs and how to improve it. Meet the model at c-e-l-o-n-i-s.com/context.

Support for the show comes from ODU. Running a business is hard enough. So why make it harder with it doesn't different apps that don't talk to each other? Introducing ODU. It's the only business software you'll ever need. It's an all-in-one fully integrated platform that makes your work easier. CRM, accounting, inventory, e-commerce, and more. And the best part, ODU replaces

“multiple expensive platforms for a fraction of the cost. That's why over thousands of businesses”

have made the switch. So why not you? Try ODU for free at ODU.com. That's ODU-o-o.com. Welcome to PropGmarkets. I'm Ed Nelson. It is June 24th. Let's check in on yesterday's market vitals. The major indices declined as tech stocks dropped around the world more on that in a moment.

Meanwhile oil continued its decline and finally the dollar hit its highest level since November

on growing expectations for rate hikes this year. Okay, what's happening? Tech stocks are selling off and the pain is hard to ignore. So far this week, the Nasdaq 100 is down roughly 4% meaning that the index has shared over a trillion dollars in the last two days alone. Chipmakers are among the hardest hit with an index of semiconductor companies dropping 8% yesterday. The route has gone global too. With Asian stocks taking a steeper dive, South Korea's

costby is down 10% from near record highs. But the biggest drop we've seen was SpaceX. The company

issued a $25 billion bond offering to finance its AI operations. And over the past three days,

the stock has fallen around 20%. So for more on this latest drawdown in the tech market, we're speaking with Gil Luria, head of technology research at DA Davidson. Gil, good to see you, a lot of pain in the tech sector. The chip stocks especially AMD's down 5% this week, Nvidia's down 5.5%

“TSNC and Broadcom down 8%. What is going on here? Why are investors so concerned right now?”

I'd characterize it as a lot of volatility. The dispersion that outcomes for next year is bigger than it's been in a while. If you think about it, if AI goes well, GDP in the US made draw 5% next year, if AI rolls over and the cycle is over, GDP may only increase by one or two percent next year. Usually we're trying to figure out if GDP's going to go 2.8 or 3.2 right now, the range of outcomes is really big. So anything, anytime something happens in AI, that makes people more optimistic,

these semi stocks continue to run. And anytime there's a sense in the market, maybe we're close to the top, then we get these big corrections. So most of what we're seeing right now is just tremendous volatility. What do you make of what's happening with SpaceX here? I mean, we talked about it

“last time. I think we talked before when public are at least maybe in the first few days.”

And it's been kind of a stunning drawdown. I'm not personally that surprised by it because I mean, I kind of thought this had to happen eventually. But what do you make? You were very vocal about that. You were very vocal and I think that was very helpful to investors

going in that you spent a few days preparing investors that there's going to be a first day pop

things that we we talked about last week, which is there's going to be shares unlocked and there's

“going to be a lot of activity around index inclusion and no and non index inclusion. So another”

place where we're going to see even more volatility. But thankfully, you didn't prepare at least your your viewers and listeners for this outcome. On that point, we haven't seen those lock-up explorations yet. I mean, this is as you say, it seems to be just pure volatility. And it seems

to be triggered by this 20 billion dollar bond offering to, I guess, finance the AI build out.

I mean, if we were to sort of draw that to its logical conclusion, I assume that means something like investors are worried about the fact that they need to raise more money to spend more money on AI, whereas the return going to come from, which goes back to AI bubble concerns, where is the ROI on this technology? Do you think that that is sort of fueling the anxiety here? Is that what is ultimately triggering people's decision to sell? Yeah, all these things are contributors to

“this. I mean, we just went out and raised $85 billion in equity capital. And now they're raising another”

25 of debt. Now some of it is to pay other loans. Some of it may not be either way. They need to

invest very substantially in this AI compute. Now to be fair to them, this is a business that's in

tremendous transformation right in front of our eyes, right? From a business that had most of it's revenue from Starlink and then about a quarter in the revenue from space exploration, now with the anthropic Google and reflection contracts, most of their revenue is coming from a neo cloud business. For many on data center capacity to to AI labs. So their business is completely different than what a year ago. This business, the business that is now their biggest business,

this neo cloud business is incredibly capital intensive. So they do need to tremendous amount of capital. Now part of this is their monetizing existing data centers, but they also want to build

a lot more data centers, not to mention they want to build some of them in space. What do you

make of what's happened to big tech in the celloph as well? Because they've really been dried into this, alpha that had a pretty significant cellophic. That was maybe a different story because a couple of the AI researchers left the company and went over to a competitor, which got a lot of investors concerned, but also Amazon's down 3% this week, metered down 2% Microsoft down

“as well. What do you make of big tech valuations and what is their role in this in this story?”

So the sentiment around those companies is they're spending too much money. They're not going to get the return. We would rather invest in the companies that they're spending on, so mostly chip companies as opposed to the companies that are spending their cash flow on those chips. And that's when the market is reacting to now, but I wouldn't glut. I would say that the Google changes are actually very important. The two people that left Google for the front

ear labs are two of the only people in the world that can understand AI right now. You can really count the people in the world that can figure out how to develop a better model is probably less than 100 people globally. And the two that left Google are probably top 10. So the fact that they said Google is so bureaucratic that Google DeepMine will not lead us to super intelligence. We should go to OpenAI and Anthropics is actually a sign that there's maybe cracks in this notion

that Google is VAI winner, which is how it got from a stock in 180 to stock over 350. So that's specific to Google, but broadly speaking, investors don't believe their returns are coming and doesn't matter that Amazon Microsoft and Google are telling us of course their returns are coming. We've already sold this data center capacity. We know a cost. We know we have a mark up. We know how our turn investors are just not buying that right now. How do you sort of justify or explain

what's going on in terms of just the delta between some of the valuations that we're seeing in AI, which are certainly overpriced. I mean, SpaceX would be sort of ground zero. The perfect example trading at 100 times revenue, lost years revenue. But then there are also companies like Microsoft like Meta and the price to earnings multiples are historically quite low right now. I mean, how do we sort of make sense of this market if you have this massive difference between

all of these different players in AI? The market is being inconsistent. The valuation of Nvidia Microsoft micron and to some extent to Amazon is a valuation that implies that this AI thing isn't going to work out and we're at the peak of the cycle and it's going to roll over next year. The valuation of cerebrus and occlo and all these optical companies implies that an Intel

because then the people that don't believe that an AI are unwilling to buy those big companies,

“but then the people that don't believe an AI are only buying the marginally AI participants.”

We see that as an opportunity to buy great companies like Microsoft like Nvidia like micron attractive valuations because if this isn't peak cycle, if this AI thing actually works out, those stocks will be a lot higher in a year too. Do you have any concerns about

what we're seeing in the macro environment specifically? I mean, it's kind of amazing and remarkable

the fact that what's happening in Iran does ultimately affect a lot of these names because ultimately it could mean higher interest rates if we do see rate hikes, which is probably one of the biggest anxieties for investors on Wall Street right now and no one seems able to agree. Are you looking at interest rates? Are you concerned about interest rates especially as it relates to those names and whether or not they are buying opportunities? Well, absolutely and right now again,

“the market is of the mind that Iran will not be an issue going forward. Therefore oil prices will”

remain low and inflation will remain low and we will not need to increase interest rates. But that

obviously as we've noticed over the last four months can change very quickly. And so we absolutely

have to keep an eye on that because that would be the major impact that a cyclical level and then they AI trend we're talking about is a secular trend but overlaid on all that is a cyclical aspect dominant which is very much impacted by inflation and the need to raise interest rates possibly. Kill area has had a technology research at DA Davidson Gill. Really appreciate your time. Thank you. Thank you.

After the break, a closer look at the minimum wage and for even more markets insights you can subscribe to my weekly newsletter simply put at simply put.proxymedia.com.

“Support for the show comes from Odo. Running a business is hard enough so why make it harder”

with a dozen different apps that don't talk to each other? One for sales another for inventory, a separate one for accounting, before you know it you are drowning in software instead of growing a business. This is where Odo comes in. Odo is the only business software you'll ever need. It's an all-in-one fully integrated platform that handles everything. CRM accounting inventory e-commerce, HR and more. No more app overload, no more juggling logins, just one seamless system that makes

work easier and the best part Odo replaces multiple expensive platforms for a fraction of the cost. It's built to grow with your business whether you're just starting out or already scaling up. Plus it is easy to use, customizable and designed to streamline every process so you can focus on what really matters. Running your business. Thousands of businesses have made the switch so why not you try Odo for free at Odo.com. That's OdoO.com.

Support for the show comes from LinkedIn ads. There's no worse feeling than making a major investment in something. Only to realize it didn't exactly live up to the hype, such as buying a nice piece of tech that ends up in storage collecting dust or taking a business workshop where your main takeaway was little more than a few motivational words. If you work and marketing, this can happen with ads. You optimize for the numbers that look great, impressions,

reach and reactions. But when they don't show revenue, well, that can turn into an unfun conversation with the CFO. LinkedIn has a word for that. Both spend. Reach the ripe buyers when LinkedIn ads and invest in what looks good to your CFO. According to the 2026 DreamData benchmark report, LinkedIn ads generated the highest row as of all major ad networks. It's a 121% you can target by company industry,

job title, and more. It's time to cut the bullspend. Advertise on LinkedIn and network the

works for you. Spend $250 in your first campaign on LinkedIn ads and get a $250 credit for the next one.

Just go to linkedin.com/scot. That's linkedin.com/scot. Terms and conditions apply. That's right. I don't think I want to live like that. Stream up on the 13th April, parallel to the U.S. start, which is a new episode. That's a problem. And you have a part with your choice.

Give that a try. Follow me from the website at the home of the dragon and wake it up. All of it is up to you at the 90s. Streaming, but not so, wow.

But while Washington stood still, much of the country move forward. 30 states have increased

their minimum wage. While 20 still use the federal floor of $7.25. Our guest today realized that a natural experiment was going on across the country. So he asked what happened to pay employment and local economies where wages went up. And what can those real world experiments tell us about whether and how the federal government should raise the minimum wage today? Joining us to discuss his findings was speaking with Aaron Dubay,

provost professor of economics at the University of Massachusetts, Amherst and author of the wage standard, what's wrong in the labor market and how to fix it. Aaron, thank you so much for joining us on the show. You have been studying minimum wage policies across the country. You pointed out

“simple and important point, which is that we've experimented with this at the state level.”

What were your findings? As I like to sometimes say, the silver lining of dysfunctional policy making is that they provide us with natural experiments. So it's not a great way to set federal minimum wage to let it not change for over 17 years. But it did mean that 30 states now have raised their minimum wage. On average, today those 30 states have something a little over $14 an hour. Minimum wages in contrast, the other 20 states, the minimum wage remains 725. That is so low,

by the way, that it's essentially like not having a minimum wage because very few people actually

get paid that little. So we're basically for the first time since the 1930s when we first

introduced the minimum wage, we have like a little less than half the country with no minimum wage.

“Versus the other half, sometimes with fairly strong minimum wage, maybe even the levels of close to”

UK or France. So this is a contrast and so what I did is to look to say, this is really simple. You know, sometimes getting causal evidence of any policy or something like that, which would be economists, you know, spend a lot of time trying to figure out, it's hard, it's hard work, and people disagree, etc. But this is one of those cases where it's actually pretty straightforward. You just look and look at these 30 states, look at these 20 states, just plot what happens in their

wages, plot what happens to their share of people who are working. And it turns out that tells us a pretty compelling story. So one of the things that we hear a lot about on why we shouldn't raise the minimum wage is that it's going to be a problem for employment, that if you if you've

“basically forced employers to pay employees more, then fewer people will be employed,”

what did your data find on that front? Yeah, so just as a as a way to thinking about this, if we have a really well functioning market, labor market, where companies are, you know, really competing hard for for workers, if suddenly the government comes in and sets wages even higher than what companies are paying, some jobs will be lost because companies are just not going to be willing to hire those individuals. At the same time, if the market is not quite working that way,

and the market has, here's a funny word that economists use, Manapsony power, which means that employers have some degree of choice. Should I pay higher wage and have lower quits, an easier recruitment or should I pay a lower wage and save on labor costs, but then have higher quits and higher, you know, harder time recruiting in such a market, a higher federal minimum wage could end up not killing jobs, but killing vacancies and reducing turnover. So then it becomes an empirical

question. And so here's what we found. So when when I look at this, 9 2010 to 2025, okay,

a broad set of 15-year period, in the states that raise their minimum wage, if you take the most impacted sector, that's restaurants. Okay, this is the low-wage sector, a size sizeable portion of the minimum wage workforce work at restaurants. Restaurant paying these 30 states today is maybe about, on average, like 8 or 9 percent higher than in the other 20 states. Okay, then that it, then it was, say, compared to 2013 before this gap emerged. So very clear, wage growth in these 30

raised states compared to the 20 states that stayed put. What happened to jobs? We can look at restaurant jobs per capita. It is virtually the same today as it was in 2013 in these two states. So clear increase in wage, pretty much sideways change in jobs in the most highly impacted sector restaurants.

We are the evidence that is actually not true, at least in the states that we have looked at,

which makes me, that's right. Yeah, it makes me wonder, is there any valid argument against the minimum raising the minimum wage and it doesn't seem to be the case? There's a number of things to think about. So one thing I will say is that by the way, this is the simplest comparison, but of course we can make fancier comparisons and other work that I have done, I have said, well, maybe they're different things going on. We can compare just neighboring counties, just one side of the border

raised it, another didn't. So very similar, otherwise. And I show this in the in the sub-stack post, you can compare the neighboring counties across the state line. Again, clear a change in wage, absolutely no change in relative employment in the two sides. And there are other things you could do, you could look at broader set of industries of low wages, etc. And the story doesn't

“change. Now, how do employers actually absorb this? And that actually gets to an important”

thing to recognize. And so I talk about this in the book called The Three Peas. So first of all,

there's some productivity offset. Higher wage does increase productivity in a couple different ways. And that doesn't pay for itself, but it does offset some of the cost in higher wages. Then there's some reduction in profits, but then the final piece is prices. And here, it is true that a higher minimum wage does lead to somewhat higher prices for particular goods and services, particularly like a burger may cost a bit more. If you look at the

overall cost of living in a state, it is not visibly affected by a minimum wage, but particular things may cost a bit more in order for lower wage workers to have a higher pay. So that's kind of the way we can think about how the minimum wage actually gets absorbed. Most people are tend to sort of support having a higher minimum wage when understanding these are some of the tradeoffs that we may face. What do you think is the next step here? Because it seems

like we have a solid body of evidence demonstrating that all of the fears that we had, that some may have had around the minimum wage being raised, are not actually true. And now, I mean, we have clearly a cost of living crisis in the country increasingly in affordability crisis. It seems like this might solve a lot of those problems. Simply raise the federal minimum wage, and therefore we would see more wage growth as demonstrated in the evidence that you've laid out, especially among

the lowest earners. And perhaps it might solve our problems. I mean, is the next step taking us to the federal government and raising the federal minimum wage? It's certainly the case that there's that lack of wage growth is a big part of the affordability crisis. And so finding ways of

“raising wages is key. And that's why sort of I wrote the book. And one of the pillars that I argue”

is exactly the raising the minimum wage. The other one, by the way, is full employment, which also plays a very important role in helping giving more leverage to workers. But when we think about raising the minimum wage, at this point, the federal minimum wage has been stagnant like we said

for 17 years. So it is absolutely critical that we do raise it. It's actually, it's something

that there's a broad base of support in this country for doing this. And the problem is really in Washington. And so, of course, we can keep raising more state minimums that that is something that I think will probably continue to see efforts. But at the end of the day, not all states, you can actually put this on the ballot. And sometimes there's, you know, different factors that affect what kind of what legislatures are going to do. And this is why it's

really critical for the federal government to do its job and actually have a minimum wage. And the key thing will be the next time we raise the federal minimum wage. We should make sure we do not let this happen again where we go for over a generation. And there's a really simple fix, which is you index them in a minimum wage, which many states increasingly do. So every year it's automatically raised. It doesn't require us to debate this adnauseum, you know, over and over again.

“And it just let it let it do its job. And so I think we have the tools. I think we have the evidence”

I think it's a matter of having the political will. R&D Bay is provost professor of economics at the University of Massachusetts and Hurston author of the wage standard, what's wrong in the labor market and how to fix it. Professor Dewey, we really appreciate your time and I'm in full support and full agreements. Thank you. Thanks for having me. Good to be here. As we end this episode, a quick check-in on my SpaceX prediction. Two weeks ago, before SpaceX went

The stock hit $176 on day one up almost 30% and then continued to rise the following week,

“hitting a high of nearly $220 per share. So check. Part two of my prediction, however,”

was that over the next six months, the stock would get cut in half. Why? Because I believed and still believe that the valuation makes no sense. And also, because billions of dollars worth of lockups would soon expire, thus allowing early investors to sell their shares, thus putting downward pressure on the stock. That hasn't happened yet. However, we are starting to see

“warning signs. The stock has already fallen as much as 30% in just a few days. It also shed $400”

billion in market cap in a single day, which was the second largest one day wipeout in stock market

history. And while it did recover some losses yesterday, it still 22% off of its highs. Now, keep in mind, this is all happening before any of the lockups have even expired, which means that the stock has yet to go through the real test, which is when thousands of investors will choose

“whether to hold the stock at an unreasonable valuation or sell it and then go buy themselves a house”

or a boat or perhaps even a plane. I know what my money is on. Having said that, there is one bright spot ahead for SpaceX. And that is when it will be officially included in the

Nasdaq 100 index. That means that roughly $8 billion worth of SpaceX shares will be automatically

purchased by passive investors, thus temporarily increasing demand. And that is set to happen in about two weeks. So that's the good news for SpaceX. Aside from that, though, there's not much to be excited about here. SpaceX is about to undergo some of the greatest selling pressures in history. We've already seen how a simple bond offering was enough to make investors nervous. Now, just imagine how nervous they will be when the inside is stopped to sell.

Okay, that's it for today. This episode was produced by Claire Miller and Allison Weiss, an engineered by Benchman Spencer. Our video editor is Brad Williams. Our research team is Dan Schlann, his fellow Kinsel, Kristen Adona Hugh, and Mia Sylvario. And our social producer is Drake McPherson. Thank you for listening to Proftly Markets from Proftly Media. If you like what you heard, give us a follow. I'm Allison, I will see you tomorrow.