So much for the rally in SpaceX (at least for now)!
Not that I don’t believe in the company, but $2+ trillion is a lot of money for a company that is trading at 100 times revenue. By 2030 will it look cheap? Probably.
For now, it looks like it’s coming in for a landing. We will see how my old 30-day window works on this stock. If you don’t know that rule, here it is. If you’re not able to buy an IPO at the initial price, then you wait 30 days and reevaluate at that time.
SpaceX went public on June 12, so I will wait until July 12 to see how I feel about the first month of performance. Is it still over the IPO price? Has it bottomed yet? How are buyers/sellers feeling about the company? Today it’s down about 9% in the early morning trading.
In case you wanted to see a slightly wider view (it’s only been for six days), here’s the chart from the IPO date. The bars at the bottom of the chart are the volume of shares traded for that day.
As of Thursday (Friday was a holiday), the average SpaceX buyer is losing money.
With today being down, I would expect that would be even worse. There are two pieces of good news in the stock. One is it’s still above its IPO price ($135) and two, the stock is still above the closing price of the first day.
SpaceX investors can take their victories where they can!
So, while I was getting the chart for SpaceX, I also saw the ‘Heat Map’ of the market this morning and it confirms again my thoughts. Small caps will do better than large, and equal weight will do better than market cap weight.
You can see that much of the Mag 7 are down today, but the equal weight S&P (ticker: RSP) is positive today.
That is a trend that I expect will do well over the next couple years (maybe more). Many are talking about how expensive the market is. I have talked about that as well. But it depends on how you slice the market up. The S&P 500 is expensive at about 32 times trailing earnings, while the equal weight version is only 21 times earnings. hat’s about a third cheaper if my math is correct.
Meanwhile, the S&P small cap index is only trading at 19 times earnings.
Again, that is a trend I would expect to continue for a while. The last trend that I think has legs is the international versus domestic stock trade.
This is only one day, but it is an area that has underperformed for a long time, and now I think it’s time has come. We shall see what happens in the next few years.
Finally, I have to give a final farewell to the Maestro – the esteemed Alan Greenspan! Certainly, one of the best Federal Reserve Presidents we’ve ever had. You know I’ve been critical of them, but overall he was a very good President. Of course, it didn’t hurt that he was at the helm for a 20-year bull market. But nontheless, a great asset to the United States and it’s a shame to see him go, RIP Mr. Greenspan. Here is a comment from his successor, Ben Bernanke.
That’s it for this week, I hope you have a good week. If you have any questions or comments about this or any other topic. We will certainly be happy to have a conversation.