While investors chase rockets, value hides in plain sight

InvestorDaily

The rocket company was priced at US$135 per share on June 11, giving it a value of roughly US$1.75 trillion. By the close of its second trading day it had surged more than 40%, assisted by the launch of options on the stock. On Friday 19 June, after a rollercoaster week, SPCX closed at US$185, still up nearly 40% and valuing the company at around US$2.44 trillion. The frenzy, in short, is just getting started.

Beneath the spectacle of humanity’s most celebrated aerospace company finally going public, seasoned investors should detect something uncomfortably familiar: the mechanics of a meme stock squeeze dressed up as the most exciting IPO in our generation.

The architecture of a squeeze

The SpaceX IPO was, by almost any measure, the largest in history. It raised US$75 billion, more than double Saudi Aramco’s 2019 record. What made it structurally unusual, however, was not the size but the design. Elon Musk’s team deliberately reserved approximately 30% of the offering for retail investors, routed through platforms including CommSec in Australia. The order book was rumoured to be 4x oversubscribed, with roughly US$300 billion in orders chasing the available allocation. Retail investors alone contributed an estimated US$15 billion of the raise, a number that Nasdaq’s own president described as larger than most IPOs he had seen.

The rest of this article can be found at investordaily.com.au.