For those of you not circling the earth in orbit, you likely know SpaceX went public on Friday and it was a great debut. It’s not just the valuation of the IPO that was impressive; it was the way they pulled it off and apportioned the shares. Retail allocation went from 30% to roughly 20%, while institutions clamored for the additional shares. Ron Baron, one of Elon Musk’s biggest supporters, bought another $1 billion worth of shares in the IPO, bringing his total to $25 billion.
Another very vocal supporter is Cathie Wood. You know, the one who had a $1,000 price target on Tesla when it was under $100? The one who put her valuation model for Tesla on her website and challenged anyone to poke holes in it. Just for reference, Tesla is $2000+ when taking the 5 for 1 split into account.
Now she is supporting SpaceX in a big way. She bought a total of 3.3 million shares at the IPO on Friday.
Again, Cathie Wood shares her research for anyone to pick apart. Her research shows more than $1 trillion in pre-tax earnings by 2035.
Another back door to own SpaceX and some private companies is through Alphabet (Google). They have quite a large venture portfolio now.
Anthropic is possibly the next company to go public and will likely carry a $1 trillion market cap. Oh, and there’s Open AI that is in that same boat.
So, while SpaceX had a good first day and a good follow up Monday, people can only really buy the stock right now. Fidelity locked up people for 15 days or they would be put on the naughty list (risking their ability to access shares in other upcoming IPOs). Many other participating firms were doing the same thing. After all, they want people investing, not speculating and flipping. Here’s what the lock up timeline looks like.
Many of those shares have performance metrics or time associated with them. At least half of those shares will be locked up for 90 days.
Here’s what it leaves us with –
I still stand by my original thoughts from last week. The first box is checked off – the IPO went well. The next box will be earnings and what happens when early investors can start to sell. That may be a time when the shares suffer, only to have it do well again down the road. I don’t know the future any more than anyone else does. I like the company long-term (more than 10 years) but think that in the next 1-3 years it could show a better time to buy.
Here’s one example of why it may do well in the near term.
How’s that for a rush to judgment? Such sentiment can be a contrary indicator, for sure. As an aside, did he really want to buy 1000 shares? That’s $135,000. I’m guessing that anyone who could buy an allocation of that size in just one stock likely doesn’t have his account at Robinhood. Just my opinion. What usually happens is you ask for a ridiculous number of shares, knowing that you won’t get that many. But that’s pretty extreme.
We, on the other hand, did get everything we asked for from Fidelity for the handful of you who requested shares. But there are a lot of disappointed investors who didn’t get what they wanted. Sometimes it’s better to be smart about how you play the game, than just playing the game.
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.