SpaceX's turned in a dominant debut. But traders are torn about the future.
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- SpaceX climbed 19% in its stock-trading debut.
- Demand was strong, particularly from retail investors.
- After talking to a handful of institutional and retail traders, BI found a divided investor base.
As I was watching SpaceX's IPO debut, I couldn't help but get some flashbacks to a young LeBron James.
When LeBron entered the NBA at age 18, he was already anointed as the next big thing. This was the player who was going to challenge Michael Jordan as the basketball GOAT. And guess what … it's played out exactly like that. He lived up to — and even exceeded — every last expectation. Any haters were quieted almost immediately.
Fast-forward to SpaceX on Friday. It came in with all the hype in the world, touting far-flung ambitions of colonizing Mars. It wasn't profitable, but it had enough investor interest to help it debut as one of the 10 most valuable companies on earth. There was skepticism too, largely around the company's decision to cut in retail investors to such a large degree, as well as its eye-watering valuation.
Across an admittedly small sample size of one day, SpaceX — like LeBron before it — handily lived up to astronomical expectations. Yes, the indicated open price slid throughout the morning before the stock debuted 11% higher. But over the course of a couple hours, the shares extended gains to an intraday high of 31%. SpaceX ultimately closed with a 19% first-day gain.
Investing in SpaceX — like everything related to Elon Musk — is a polarizing prospect. The passion swings in both directions. Immediately after the first SpaceX trades, the BI markets team went looking for investor reactions, from both retail and institutional perspectives. Here's what we found:
Retail
Positive
- "Despite all odds, I have a feeling this is going to be great trade for those successful in getting IPO allocation because there is every incentive for this to go well." — Noor Al, WallStreetBets moderator
- "I see no downside in investing in a monopoly which SpaceX currently has on rockets … The untapped market of data centers in space, they aint going away anytime soon and I would much rather see them orbiting earth than sucking up resources here on earth." — retail trader Casey Dyer
Negative
- "Honestly, many of us wouldn't touch this with a ten foot pole but we're here to see if this is the Hindenburg we think it'll be." — Reddit user msnrcn
- "The retail play is to hope that the Elon stans have enough dry powder to bail out the original investors and give retail a nice profit while smiling knowing they will make a fortune once data centers in space are operational." — Reddit user Dangerous-Quality-79
Institutional
Positive
- "The IPO signals that markets are ready for equity-funded AI capex, which is important given the upcoming wave of mega-IPOs." — Alexander Lis, CIO of SDV
- "The stock's strong opening reflects genuine market enthusiasm for the company's technological leadership and Starlink's growing recurring revenue." — Mike Alves, financial planner at VIDA Vision Fund, a private investor in SpaceX
Negative
- "At current trading levels, however, the valuation appears stretched relative to near-term profitability." — Mike Alves, continued
- "The AI story has sucked all of the oxygen out of the room and has become the only story, and I think this IPO is capitalizing on that … I don't think this thing just keeps going up and to the right … I think we'll start seeing things start to come back down to earth to some extent." — Scott Bickley, advisory fellow at Info-Tech Research Group
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