SpaceX stock drops amid Ukraine connectivity dispute, AI sector pressure

Space Exploration Technologies Corp. shares declined 6.5% in morning trading Thursday following the ongoing controversy over speed restrictions imposed on Starlink and Starshield satellite services used by Ukrainian military forces, as well as broader selloffs and pressure on AI-related names.

The restrictions caused connectivity failures for drones traveling above approximately 100 miles per hour, disrupting battlefield operations without prior notification to Ukrainian defense officials. The incident drew criticism from Kyiv and prompted bipartisan concern in Washington.

SpaceX CEO Elon Musk stated Wednesday that "Starshield systems are owned and controlled by the U.S. government" and that "any limits on speed or usage are decided by the US military and ultimately POTUS," directing responsibility to President Trump.

Some restrictions appeared to be partially removed by Thursday morning. The situation raised questions about the company's government contracts and its involvement in U.S.-Ukraine-Russia geopolitics.

A Barclays analyst note published Tuesday predicted a possible Tesla-SpaceX merger announcement before Tesla's December shareholder meeting, adding to uncertainty surrounding the stock. Many other AI-related names are seeing deep selloffs Thursday.

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