When SpaceX (NASDAQ: SPCX) came to the market on 12 June via an Initial Public Offering (IPO), demand for the stock was sky-high. As a result, its share price soared.
Yet since then, demand has cooled significantly, and to the surprise of many, the stock has actually fallen below its IPO price. With that in mind, here’s a look at how much £5,000 invested in the company immediately after the IPO would be worth today…
SpaceX surged post-IPO
Space’s IPO price was $135. However, when the stock commenced trading on 12 June, it opened at $150. So let’s say that an investor managed to grab £5,000 worth of stock at $150 per share. We’ll ignore trading commissions and FX fees and also assume that they bought exactly £5,000 worth of shares via fractional shares.
Today, that £5,000 would be worth about £4,120. Because the stock has fallen to $123.54. So the investor would be sitting on a substantial loss. To breakeven, they’d need to see a gain of 21% from here.
The IPO curse
Now, one key takeaway from all this is that it can pay to approach hyped-up IPOs with caution. Often, buying immediately after the IPO is a mistake.
SpaceX is certainly not the first stock to tank after shooting up post-IPO. Other stocks that have done this in recent years include:
- Airbnb: it came to the market at an IPO price of $68, soared to near $150 on day one, then fell to near $80.
- Snowflake: it came to the market at an IPO price of $120, soared to near $250 on day one, then fell to near $100.
- Cerebras: it came to the market at an IPO price of $185, soared to $350 on day one, then fell to near $176.
By not buying into the hype, investors could have snapped up shares in these companies at much lower prices in the months and years after their IPOs. It could be something to think about as Anthropic and OpenAI prepare to come to the market.
Is there an opportunity today?
Is SpaceX stock worth considering for a portfolio today? Well, it’s starting to look a little more attractive after its fall. The market-cap is now ‘only’ $1.6trn. That’s a lot more reasonable than its peak market-cap of near $3trn and with revenues rising rapidly, the company could grow into that valuation in the years ahead.
That said, I think we could see further share price volatility in the coming months around earnings. Especially if growth isn’t as high as expected.
Insider and long-term investor lockup expirations could be another source of volatility. We could see a fair bit of selling pressure in the near term.
Personally, I’m targeting a share price of $100 here. If it falls to that price, that’s where I’ll consider buying some stock for the long term.
Should you invest £5,000 in Space Exploration Technologies Corp. - Class A right now?
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Edward Sheldon owns shares in Snowflake
