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SpaceX Set to Overtake Amazon as Post-IPO Rally Accelerates
On Tuesday, SpaceX extended its post-IPO rally, sending the aerospace company heading to becoming the fifth-largest company in the world (after Apple and Alphabet) and recently topping Amazon as well. The shares gained over…
On Tuesday, SpaceX extended its post-IPO rally, sending the aerospace company heading to becoming the fifth-largest company in the world (after Apple and Alphabet) and recently topping Amazon as well.
The shares gained over 8% in premarket trading and were last up 8.5% at $208.90. This puts SpaceX up more than 54% since its IPO of $135 and values the company at nearly $2.75 trillion.
SpaceX Closes to the Valuation of Amazon
This recent rally would push SpaceX past Amazon, which now has a market cap of $2.66 trillion. Last week, Microsoft was still in the lead at $2.95 trillion and three of the world's most valuable companies have a market capitalisation of over $4 trillion each.
By early Tuesday morning, over $3 billion of SpaceX stock had been traded, more than the total trading volumes for Nvidia, Microsoft, Tesla and Apple combined. The greenshoe option was exercised by underwriters to buy more shares and also raised total IPO proceeds to $85.7 billion for the company.
Analysts Warn About Price and Volatility
Even with the strong rally, analysts are divided over whether its valuation is justified by and large earnings performance.
Investors seem to be buying into stocks in the anticipation that prices will just keep rising. A year ago, sales at SpaceX were $18.67 billion and the company posted a net loss of $4.94 billion before it merged with xAI.
The stock has also been put on notice by analysts and portfolio managers for a potentially volatile, somewhat limited public float and options trading's green light has recently ignited.
Index Inclusions Could Fuel Further Gains
Investors are also eyeing the major stock indexes to incorporate SpaceX. The company is on pace for rapid inclusion in the Nasdaq 100, which could introduce new buying interest from passive funds and ETFs that follow the index.
SpaceX will also be added to indexes at FTSE Russell (June 26) and MSCI (June 29). SpaceX shares also backed some intraday gains following news the company is acquiring Anysphere, a $60 billion software company.
FAQs
Why is SpaceX raising its share price?
Investors are betting on future growth and looming inclusion in major stock indexes have fueled an increase in shares of SpaceX following the company's coming into the Nasdaq.
Why are analysts warning about volatility?
This high valuation and relatively small public float have analysts saying the company's price could swing dramatically in either direction with regularity, particularly during the first few months as a publicly traded entity.
What could support the stock going forward?
Anticipated inclusion in the Nasdaq 100, FTSE Russell and MSCI indexes may provide added fuel for passive investment funds and ETFs as well.
Source: Reuters
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