IPO Bonanza
Welcome to MktContext! I am a professional money manager, trader, and investor who has been timing and beating the market for over a decade. We specialize in predicting market direction by studying the economy and market signals. Join 12,000 subscribers at MktContext.com for our weekly deep dives and analysis!
The SpaceX IPO is coming soon (June 12) followed by OpenAI (Sept) and Anthropic (Oct). These are slated to be some of the largest the world has ever seen:
IPOs play a special role in any bull market cycle — they often mark the end when stocks go parabolic and euphoria runs high. Issuers see it as a chance to extract max value from the sales.
SpaceX filed its IPO paperwork with an unusual structure that lets insiders start selling shares almost immediately instead of the standard 180-day waiting period. They also accelerated the IPO date and got concessions from Nasdaq to fast-track the stock into the Nasdaq-100 Index.
Previously, Nasdaq excluded companies with low float (i.e. the amount of shares available to trade). Not only did Nasdaq grant a unique exemption for SpaceX, they even applied a float-multiplier so the stock would have a higher weight in the index. That means more forced-buying despite the lack of available supply of shares.
These unusual circumstances make us think bankers are eager to artificially inflate the issuance and push the IPO out before it’s too late. It reeks of informational asymmetry as insiders seek to offload overvalued stock onto exuberant retail investors. With the hype leading up to the event, and space-related stocks already sky-high, it is difficult to buy SpaceX at this juncture.
From a profitability standpoint, SpaceX’s underlying business is unremarkable. It consists of:
a highly profitable Starlink telecommunications business
a flat-lining space rocket launch business
a money-burning AI business with plans for orbital AI compute satellites
Read the rest of this article at MktContext.com
Join 12,000+ macro investors who get these insights before the mainstream media catches on!