Shares of SpaceX end first day at US$160.95, up 19% from IPO price

[NEW YORK] Investors and retail traders from across the US and around the world were glued to their screens on Friday (Jun 12) as Elon Musk’s SpaceX started trading in the stock market after the biggest initial public offering in Wall Street history.

“The atmosphere is electric! It feels just like it does when tip off is kicking off for a Knicks playoff game,” RJ Grant, global head of equity trading at Stifel Nicolaus, said by phone in New York. “It’s also interns and new hire season as we get into the summer, so there’s a lot of bright-eyed and bushy-tailed, young people captivated by all of this.”

Shares of SpaceX, formally known as Space Exploration Technologies Corp, opened at US$150, roughly 11 per cent above the US$135 offering price, making Musk the world’s first trillionaire. They immediately jumped, climbing as high as US$176.52 before sliding back and ending their first day at US$160.95, up 19 per cent from the initial public offer price. 

“Everyone is very excited. They keep calling asking, ‘Why can’t I buy options on SpaceX’,” said JJ Kinahan, senior vice-president, head of retail expansion and alternative investment products at Cboe Global Markets. His firm is preparing for the launch of SpaceX options on Tuesday, he added. “That’s pretty much all they want to know, and ‘Is this a good price for an IPO?’”

Georgii Ivanov, a 59-year-old retiree from Huntington, New York, took time out of his trip to Paris to check in on the SpaceX IPO. He requested 1,000 shares through a small brokerage that uses Fidelity, but he only received 50. Still, he’s happy to be investing in Musk’s latest venture.

“It’s not all about multiples or anything else but excitement that he creates,” said Ivanov, who has been trading for 40 years. “I’m a long-term buyer. I’m not looking to speculate on this in any way. I would think I would accumulate a thousand shares, maybe a little more, and keep it in my retail portfolio.”

‘Very good day’

Austin George of Cocoa Beach, Florida, used his “fun money” to buy 10 SpaceX shares. The 30-year-old project manager at a credit union said he doesn’t want to miss out if SpaceX takes off the way Musk’s other high-flying company, Tesla, did and wishes he could’ve bought more.

“I would’ve loved to do 1,000 or 2,000 shares,” he said. “I think that’s when it starts to make a difference. Ten shares is going to be not worth a dent. It’s more for I’m backing something that I’m passionate about. It’s going to be a long-term hold for me.”

Other investors had issues getting in too. Chris Amarvi, a software engineer in Baltimore, got 65 shares at US$150 apiece from Schwab after trying a few times. He’s planning to pick up more in a few weeks when the general 15-day hold period ends and others can start selling.

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“Honestly it feels like peak scarcity psychology,” said Haris Khurshid, chief investment officer at Karobaar Capital. “SpaceX can obviously become an incredible company, but whenever the conversation shifts from valuation to simply getting access, you know it’s more about enthusiasm, which seems to be running pretty hot.”

In Leipzig, Germany, Henning Muller-Dannhausen owns 12 SpaceX shares that were allocated through retail trading platforms and is debating what to do with them. “I’m mostly in for the long term,” the 50-year-old freelance creative director said. “Now the challenge is, is there a hotter story? Should I sell them and buy Anthropic?” referring to the artificial intelligence developer that’s preparing for its own IPO soon.

Ron Shamgar, the head of Australian equities at Tamim Asset Management who’s based in Sydney, said the fixation on SpaceX is all about Musk’s aura among investors.

“You’re buying Elon. You’re buying the visionary, the man, and what his plans are for the next 10, 20 years,” said Shamgar, whose fund is focused on Australian stocks and isn’t invested in SpaceX. “Otherwise, you would never invest in this based on the valuation.”

Cult stock

Michael Monaghan, partner and portfolio manager at Founder Funds in Dallas, which invests in companies run by their founders, called Musk the “ultimate founder of our generation”. Monaghan has been doing 15 to 20 hours of research a week for the last eight weeks ahead of this IPO, trying to pencil out a strategy for what level and valuation he’d buy more SpaceX as it begins trading. “If we can buy a little more under two-and-a-quarter trillion, I’ll be a happy guy today,” he said, pointing to the company’s total valuation.

In London, Amanda Lyons, head of research at Energy Group Capital, is following the offering from her desk at home. “The watch parties tell you everything you need to know,” Lyons said. “This is being priced as a cult stock, not a cash flow, and you’ll get hurt if you pretend otherwise. That’s not a criticism, it is just what it is.”

Some advisers are urging their clients to be cautious. Melissa Armo, founder of the Stock Swoosh, which provides investing courses for retail traders, has been inundated with calls about trading strategies for the IPO. She’s reminding everyone about other hotly anticipated deals that ended up being flops after the first day of trading.

“I don’t know if anyone is going to listen to me. People are pretty hyped up,” she said, adding that the earliest she’s willing to trade the stock is next week. “I think this is the wild, wild west trade.”

And then there’s John Saxman in Charlottesville, Virginia, who said he bought a single share “for the memes”. The 24-year-old who worked in investment banking and will be getting a master’s degree at University of Virginia in the fall, is a self-described Musk follower. But even he is reluctant to get in at these prices.

“I have the Robinhood Gold credit card, I think that’s why they gave me pre-IPO access. I didn’t think I’d actually get it,” he said. “I’ll probably buy in lower if they reach profitability.” BLOOMBERG