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Judging by all the buzz on social media—and the emails from the youngsters in my family—the SpaceX IPO appears to be the first investment in history with no downside.
The case seems straightforward:
Like flag pins and patriotic hats, accepting SpaceX’s invitation to participate in the IPO appears to be an American civic duty. Possibly world peace.
I’m just delighted a generation of investors will have the opportunity to learn valuable lessons about margin of safety, the madness of crowds, and loss aversion —assuming, of course, that those concepts haven’t been rendered obsolete by rockets.
Great Question. I remember when Facebook came on the scene, this could be similar, but probably not. At opening it barely made the strike price of $38 in 2013, then by September down to $18, then took 14 months from start to get back to $38. By early 2014, it crossed $60; by 2018, it was over $200 and in 2025 to $700. So, my take is buy, just a few shares at the beginning, if it goes down wait. However, this one could be much different, because Elon Musk has a mystique about him. If it appears to be going up, up, then buy on the up, but do not get crazy. It really only takes one share over time. Example McDonadls stock in 1968 was $60, today that one share is worth $136,000!! Enough said.
I read an article yesterday that said the IPO is extremely overpriced. Best to wait to buy
I’ve been wondering this week if the Space X IPO along with those coming from Anthropic and OpenAI will mark the peak of a manic market cycle sort of like the AOL/Time merger in Jan, 2000. Underlying all this is the passive bid which keeps powering the market higher, higher earnings revisions, etc., so it’s impossible to call the top. That said, I don’t want to be exit liquidity for all the VCs that bought into Space X. My hunch is that Space X will see a pop after the open and then a decline down to a more reasonable valuation as those who can sell will. That’s my 3 cents, which is up from 2 cents due to inflation. 😊
If you are an index investor, your particular index fund may or may not invest in this security at the IPO. Vanguard funds will probably invest after 5 days. The S&P 500 will consider after a year of trading, if profitability requirements are met. The devil is in the details.
A good article from Morningstar explaining the Space X impact on index funds.
The SpaceX IPO: How Index Funds Are Adapting | Morningstar