With so many eyes focused on what was the biggest IPO launch last week, SpaceX’s debut played out very well against all expectations.
The question now though is, what comes next for what is now the sixth-largest listed company by market value in the US?
For starters, expect things to get more volatile in the days/weeks ahead. It was already a hectic session on Friday to begin with but then again, so are all highly-anticipated IPO launches – let alone the biggest one ever.
Options on SpaceX shares are set to begin trading as soon as Tuesday and that will induce a lot of volatility into the stock, if Tesla is anything to go by as an example.
Heavy options activity, and expensive ones at that, will inject a big chunk of volatility to a stock that is already seeing many questions about its valuation and place in the market.
The main question for investors is: Are you investing in SpaceX or just trading SpaceX?
Given such high valuation to begin with, it is a fair assumption to think that many funds are erring towards the latter. In the case of retail players, surely it is more so the latter than the former. And as reminder, this is one of the bigger launches in which retail players got a larger slice of the pie than usual.
In essence, investors appear to be more attracted to the ticker and the name rather than the fundamentals.
That hasn’t stopped share prices of other companies in similar positions before but SpaceX is a different beast. The sheer size and upfront pricing already puts a lot on investors in trusting the future, rather than asking the company to prove the now.
Besides that, just be wary that stock sale restrictions for SpaceX shares will also gradually lapse over the coming six months.
A filing shows that shares will become eligible for resale under a staged system linked to the company’s performance. Some funds and asset managers have holds for up to a month. So, I gather that is when the real test begins for SpaceX shares.
For now, it is easy to point to a solid debut paving the way for further gains. However, the better market mood from the US-Iran deal and the fact that stock sale restrictions are still in place are very much key drivers helping as well.
All that being said, how much of this would matter if investors are inadvertently investing into SpaceX anyway?
The company will soon be added into the Nasdaq index, as well as some MSCI ones, later this month and down the road eventually
