SpaceX bonds flagged the stock trouble weeks before shares cracked

Every generation of investors gets handed a story it is told not to question.

For your parents, it might have been blue chips that could not fail. For your older siblings, it was probably a website with a good domain name.

For a lot of you reading this, it has been the idea that anything touching artificial intelligence deserves whatever price the market decides to put on it.

Stories are how money gets moved. They are also how money gets lost.

The complicated part is that a great story and a great investment look identical for a while. Both climb, both pull in new buyers, and both get covered relentlessly.

The difference only shows up when the buying finally stops. And by that point, the early money has almost always finished selling to the late money.

That is roughly where the year's most celebrated listing sits right now. Shares of SpaceX (SPCX) have surrendered every post-debut gain, and economist Peter Schiff just used that collapse to send an uncomfortable message about the rest of your portfolio.

SpaceX closed at $115.26 on July 22, down 6.7% on the session and roughly 49% below its record high, according to Seeking Alpha.

That close put the stock below the $135 price institutions paid for it in June.

Schiff, chief economist and global strategist at Euro Pacific Asset Management, did not treat that as a SpaceX problem. He treated it as a preview.

The decline "could be a harbinger of things to come," he wrote in a post on X, pointing at other overhyped stocks and cryptocurrencies.

He had been building to this for two weeks.

"AI isn't a bubble, AI stocks are," he said earlier in July, per Benzinga.

One correction is worth making, because the number matters. Schiff described the close as nearly 20% below the offering price.

Run the math and $115.26 against $135 works out to about 14.6%, not 20%. The 49% drop from the high is accurate, the gap from the IPO price is smaller than advertised.

Several outlets repeated his figure without checking it. I flag that not to score a point, because this is precisely how a market narrative hardens into a fact.

Here is the part almost nobody outside credit desks is discussing, and it is why my analysis takes this particular warning more seriously than Schiff's usual output.

SpaceX sold $25 billion of debt in June across five maturities, and the longest slice has been repriced hard. Yields on the 2056 notes reached a record 7.6% this week, reported TipRanks.

Bond investors do not get paid for optimism. They collect a fixed coupon and they get their principal back or they do not.

So when they demand more yield, they are quietly telling you what they think of the odds.

By early July, SpaceX debt traded at an average spread of 1.62 percentage points over Treasuries, wider than the 1.55-point average for junk-rated corporate bonds, according to 24/7 Wall St.

The company carries an investment-grade rating from all three major agencies. Credit markets were pricing it as a speculative borrower anyway.

The stock has now caught down to the bonds. That sequence, credit first and equity second, is the one worth memorizing.

Here is the timeline that got the stock here:

Shares were sold to institutions at $135 apiece on June 11 in the largest offering on record, according to Seeking Alpha.

The stock peaked at $225.64 on June 16, five trading days after its debut, per Seeking Alpha's summary of exchange data.

SpaceX joined the Nasdaq-100 before the open on July 7 under the exchange's new fast-track rule, as TheStreet reported.

Roughly 196 million shares sat short by late July, about 31% of the free float, according to Ortex Technologies.

Short sellers held an estimated $15.5 billion in paper gains as of July 22, per Ortex data cited by Reuters.

SpaceX reports its first quarterly results as a public company on Aug. 4, and roughly 911.5 million insider shares become eligible for sale on Aug. 6, reported the Motley Fool.

That is a supply event landing two days after an earnings event, into a stock with nearly a third of its float already sold short.

Every insider on the roster last transacted on June 11, at $135. None of them has had a chance to sell a share since.

The company posted a first-quarter net loss of $4.28 billion on $4.69 billion in revenue. That arithmetic sits behind the bond repricing and behind TheStreet's earlier coverage of its debt sale.

You probably do not own SpaceX directly. You may well own it anyway.

If you hold a Nasdaq-100 index fund in your 401(k), SpaceX entered your portfolio automatically on July 7. You did not buy it. You did not price it.

A rules change put it there, and your contribution bought some of it on the way down.

That is the quiet cost of index investing during a hype cycle. The index does not ask whether a stock is expensive before adding it, and it will not ask before it adds the next one.

Schiff's record on timing is poor, and anyone trading off his calls has the losses to prove it. The mechanism he is describing this time, though, shows up in the data rather than in his rhetoric.

So here is the practical move. Stop watching the share prices of your most exciting holdings and start watching what their lenders charge them.

Bondholders were early on SpaceX by roughly three weeks. Credit desks repriced the risk while equity investors were still paying a premium.

If the companies driving your returns are paying junk-like rates on investment-grade paper, the market has already reached a verdict your stock screen has not shown you yet.

The first domino has a name and a ticker. The question worth asking before August is which of your holdings is standing directly behind it.

This story was originally published by TheStreet on Jul 25, 2026, where it first appeared in the Investing section.