SpaceX’s stock has fallen about 50% from its post-IPO peak, wiping out roughly $1.2 trillion in market value, as investors question the company’s $60 billion acquisition of the AI coding tool Cursor. The decline, which has accelerated over the past month, has made SpaceX one of the largest wealth-destruction events in the history of the public markets, and it has turned the company’s biggest deal into its biggest liability.
The Cursor acquisition closed in June after a bidding process that also drew interest from other technology companies. SpaceX’s chief executive, Elon Musk, defended the price as a bet on the future of software development, arguing that AI tools will reshape how code is written and that Cursor has the best product in the category. Investors have not been persuaded. In earnings calls, analyst questions and investor forums, the recurring complaint is the same: a rocket and satellite company paying $60 billion for a developer tool looks like diversification for its own sake, not strategy.
The doubts have been compounded by the mechanics of the deal. SpaceX financed part of the purchase with stock, so the decline in its share price has increased the effective cost of the acquisition for sellers, and the company has had to issue additional shares to close the gap, according to people familiar with the transaction. The result is a circular problem: the more the stock falls, the more expensive the deal becomes, which pushes the stock lower.
The company’s operational performance, in contrast, has been strong. Starship completed its 13th test flight this week, with the vehicle achieving all of its primary objectives, including a controlled landing of the booster. The success was met with muted celebration inside the company, according to employees, because the stock reaction was negligible. The market, it seems, has stopped pricing SpaceX on launch results and started pricing it on the balance sheet.
Cursor, the acquisition target, is meanwhile expanding in its own right. The company this week launched Cursor Start, a localized version of its coding assistant for the Indian market, priced at 649 rupees a month, roughly $7.8, about 80% below the U.S. price. The move targets the fastest-growing developer population in the world and positions Cursor against Microsoft’s GitHub Copilot and Anthropic’s Claude Code, both of which have been pushing aggressively into emerging markets. Cursor executives said the Indian version includes local-language support and pricing designed for individual developers and small teams.
The Indian launch shows why SpaceX wanted Cursor in the first place, and of why the deal’s critics are unconvinced. Cursor’s growth metrics are impressive: the tool has millions of active developers and its revenue has been growing at a triple-digit rate. But the company operates in a market where the leading competitors are backed by Microsoft, Google and Anthropic, and where pricing pressure is intensifying. Whether Cursor can sustain its growth against those rivals, at a $60 billion valuation, is the question investors cannot answer.
For SpaceX, the stakes extend beyond the stock price. The company has plans that require enormous amounts of capital: Starship development, satellite broadband expansion and a lunar program that depends on government contracts. A depressed share price makes it more expensive to raise that capital, and the Cursor deal has absorbed cash and stock that might otherwise have funded those programs. Employees with stock-based compensation have watched their paper wealth decline, and recruiting conversations have become harder, according to people familiar with the company’s hiring.
The selloff has also attracted attention from short sellers, who have increased their positions in SpaceX stock over the past month, according to data from exchange filings. The bear case is straightforward: a company valued for its dominance of launch and satellite services has loaded up on an unrelated asset at the top of the AI market, and the combination of falling share price and rising deal cost creates a self-reinforcing decline. The bull case rests on the same argument the company has always made: that operational execution, not financial engineering, determines the outcome, and that Starship’s progress is the metric that matters.
Both sides will get fresh evidence in the coming quarters. SpaceX reports results on a private-company basis to its shareholders, and the next update is expected to show whether the core launch business continues to grow fast enough to absorb the cost of the Cursor acquisition. Cursor, for its part, will report whether the India expansion is gaining users at the pace its pricing strategy implies.
For now, the market has delivered its verdict: the richest company in the space industry is worth half of what it was a few months ago, and the deal that was supposed to broaden its future has become the question mark over it.
