SpaceX’s Real IPO Test Comes In August

Shares for SpaceX (SPCX) declined yesterday, along with the rest of the market. It’s still up 18% in its first five days of trading. Has it found a groove yet? Will it make you money if you buy it at this price?

Probably not.

The fact is, 95% of SpaceX shares have yet to hit the public markets:

Although SpaceX has traded up 18% in its first week of trading, significantly more volume will hit the markets in August. (Source: QuentenFrancois via X)

A more accurate price range for the IPO won’t arrive until next month.

And, well, beware.

SpaceX is using a phased, staggered lock-up structure rather than releasing one large block all at once.

The first 20% of restricted insider shares become eligible to be sold on or after the second full trading day following the release of its second-quarter earnings report, which is expected in late July or early August.

The first lockup release will be the earliest exit opportunity for insiders who have been looking at the IPO as a chance to get rich and sell their stock. Typically, insiders will sell first, make back their investment, and then some.

Insiders will be selling, not buying, in another frenzy for SpaceX shares.

Elon Musk also announced a $60 billion acquisition of AI coding startup Cursor yesterday. The massive war chest created by the IPO is one component of Musk’s business development blueprint.

The good news? As the next floats become available, ETFs and tech funds will scoop them up, providing price support. The bad news? If there aren’t enough buyers to keep the price afloat, those who bought this week will be sitting on a loss.

History shows that most IPOs sell off within their first 12 months of trading. On average, the decline is 54%.

If you’re buying SpaceX today, you’re buying a hot potato. If you plan to hold your shares, buckle up. You’re in for a wild ride. You’ll have to hang tight through volatility and a business plan that includes massive acquisitions, mergers and innovation before it will turn a profit.

Today’s Grey Swan Pro covers a smaller company in the aerospace and defense sector with a deep moat and a unique manufactured product used both on the ground and in the air. It stands in stark contrast to SpaceX’s current valuation — details here.

~ Addison

P.S. This afternoon on Grey Swan Live!, Ian King joins us to discuss the latest in the AI trade, what it means for our Dollar 2.0 thesis and what America’s future looks like as we prepare to celebrate America’s 250th.

Masthead

Probably not.

The fact is, 95% of SpaceX shares have yet to hit the public markets:

Although SpaceX has traded up 18% in its first week of trading, significantly more volume will hit the markets in August. (Source: QuentenFrancois via X)

A more accurate price range for the IPO won’t arrive until next month.

And, well, beware.

SpaceX is using a phased, staggered lock-up structure rather than releasing one large block all at once.

Insiders will be selling, not buying, in another frenzy for SpaceX shares.

Elon Musk also announced a $60 billion acquisition of AI coding startup Cursor yesterday. The massive war chest created by the IPO is one component of Musk’s business development blueprint.

History shows that most IPOs sell off within their first 12 months of trading. On average, the decline is 54%.

~ Addison

Masthead

Copper and resources are sending us a cleaner market signal than AI stocks.

Channeling Ludwig von Mises, we observe this morning that price is not just a number; it’s information. Price reflects what buyers and sellers collectively believe: demand, scarcity, fear, speculation, disappointment, future expectations and available supply.

When prices rise, and inventories fall at the same time, the message is usually straightforward: buyers need the stuff, and there is not enough of it.

A low VIX does not predict disaster. It measures complacency. A serial skeptic will read it as the calm before a storm. We shook off that feeling this morning and opted to pursue an opportunity instead.

Here goes:

A VIX reading below 15 means the market is not pricing in much near-term trouble, even though there are obvious risks still sitting in the room: Iran, oil prices, memory chip speculation, circular financing, high valuations, epic high concentrations, spiking long-term interest rates, a regime change at the Fed, a meltdown in Japan and a historic deficit and rising national debt.

Money is not flowing in a clean, straight line from outside investors to productive businesses. The firms at the top are investing in and buying from each other.

Microsoft and OpenAI are the easiest examples to follow.

Microsoft says OpenAI has contracted to purchase an additional $250 billion in Azure services, while Microsoft continues to account for $13 billion in funding commitments to OpenAI as an investment.

At this stage, it’s a stock picker’s market.