SpaceX Drops 4% on Agreement to Testify in New York City AI Safety Probe; Intuitive Machines Sinks 6%, Virgin Galactic Holdings Slips

SpaceX (NASDAQ:SPCX | SPCX Price Prediction) stock trades at $156.69, down 4% early in the session, following the company’s agreement to testify in a New York City artificial intelligence (AI) safety probe. Selling stretches across the space group, which makes harder any attempt to read the move as a SpaceX story alone. Friday’s testimony stands as the next scheduled checkpoint for the company and its shareholders.

Checking in on the peers, Intuitive Machines (NASDAQ:LUNR) stock trades at $12.13; it’s down 6%, representing a steeper slide than SpaceX stock. The LUNR stock drop extends a 25% year-to-date decline.

At the same time, Virgin Galactic Holdings (NYSE:SPCE) stock is at $2.64, down 0.9%; it’s a far softer dip for Virgin Galactic shares, which were already off 18% year-to-date. Both companies have been quiet on the news front, with no fresh announcements from either one.

The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is down 0.1%, a very mild for the broad market. Space names are doing much worse, and the Procure Space ETF (NASDAQ:UFO) is declining 3%. That gap points to pressure concentrated in one corner of the market.

SpaceX Heads to City Hall Over AI Safety

SpaceX has agreed to testify before the New York City Council’s technology committee on Friday as part of an investigation into AI safety risks. The council subpoenaed SpaceX founder Elon Musk and the company’s AI unit in late September. Other major AI developers testified at a hearing earlier this month, while SpaceX didn’t appear, a no-show that stepped up the dispute.

Council Speaker Julie Menin called that absence unacceptable, and the body had said it would ask a judge to enforce the subpoena, while Technology committee chair Carmen De La Rosa stated the council expects answers on data privacy, safeguards and whistleblower protections. Those questions now land on a company better known for rockets and Starlink than for chatbot oversight.

Space Selloff Runs Wider Than One Hearing

Musk folded his AI venture into SpaceX in February, which extends AI regulation across the whole company. SpaceX makes revenue from launch services, from the Starlink satellite internet business and, since that venture was folded in, from cloud computing contracts. The company is also buying mobile spectrum as it builds out direct-to-cell service, a push that has drawn analyst attention to its ability to compete with the large wireless carriers.

Intuitive Machines flies lunar landers and sells space infrastructure services, largely on government contracts. Virgin Galactic Holdings sells suborbital flights to private customers, a consumer-facing model built around human spaceflight. That business mix leaves both companies far removed from the regulatory exposure attached to a large AI operation.

Despite that distance, Intuitive Machines stock is falling harder than SpaceX stock. As of July 31, SpaceX made up 3.8% of the Procure Space ETF’s net assets, while Intuitive Machines accounted for 1.3% and Virgin Galactic Holdings 0.2%. With those modest weights, the fund’s decline reflects selling across a much wider basket of space names.

What to Watch Next

SpaceX will testify on Friday, and the open question is whether that hearing closes the matter or extends it. A drawn-out fight, including any court effort to enforce the subpoena, could keep the AI cloud attached to SpaceX stock.

Clear answers on data privacy, safeguards and whistleblower protections could address the committee chair’s concerns. Investors holding several space names may want to review their overall exposure, since the selling is hitting the group broadly.

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