Retail Investors FOMO In, Institutions Raise Expectations – Where Is SPCX Headed Next?

Original by Odaily (@OdailyChina)

Author: Golem (@web3_golem)

Last Friday, SpaceX closed its first trading day at $160.95, giving it a market cap of $2.1 trillion. While SpaceX still set a record for the largest IPO in US stock market history, the result fell short of the heightened expectations set by pre-IPO market sentiment. Research firm CFRA even assigned SPCX a "Sell" rating, suggesting Musk's "Mars story" hasn't resonated as strongly as anticipated. (Related reading: After SpaceX's Market Debut: Is the $2.1 Trillion Market Cap Still Worth Chasing?)

Addressing these market concerns, SPCX surprised everyone with a strong rally at the US market open this Monday. According to Gate US stock data, SPCX climbed throughout the session, eventually closing at $192.5, a gain of 19.6%. The closing price was also the day's high, pushing the market cap to $2.519 trillion and making SpaceX the 8th most valuable company globally. However, market sentiment hasn't waned yet. Hyperliquid data shows SPCX's pre-market price has already risen above $214, making it highly probable that SPCX will continue Monday's rally when US markets open on Tuesday, potentially surpassing Amazon for the 7th position by market cap.

US-Iran Signs Memorandum of Understanding, Retail Investor Enthusiasm for SpaceX Remains Undiminished

On a macro level, the agreement reached between the US and Iran this week delivered a significant positive signal to the US stock market. The market generally anticipates that as geopolitical tensions ease, global stock markets could see a new round of gains, with SpaceX being one of the beneficiaries.

On June 15, Trump announced the agreement with Iran, stating that the Strait of Hormuz would be opened. Unlike previous instances of unilateral rhetoric, this agreement was also acknowledged by Iran. Iranian Deputy Foreign Minister Gharibabadi confirmed the same day that the text of the US-Iran Memorandum of Understanding had been finalized and would be formally signed in Switzerland this Friday (June 19).

The agreement was further confirmed by the Iranian President, and US Vice President Vance stated that the deal had been signed electronically over the weekend, indicating the terms are in effect and reducing the likelihood of either party backing out. Following the news, US stocks opened broadly higher, with the Dow Jones up 0.92%, the S&P 500 up 1.65%, and the Nasdaq up 3.07%.

Morgan Stanley believes that a long-term agreement between the US and Iran would see oil prices fall, easing inflationary pressures. They argue the US stock market is transitioning from a "single-stock rally" to a healthier, broad-based advance, with upward momentum potentially spreading beyond the tech sector to a wider range of cyclical industries.

In terms of market sentiment, SpaceX remains the most sought-after stock by retail investors. According to VandaTrack data, on June 16 (local US time), SPCX saw net retail purchases of approximately $93.8 million, accounting for about 73% of the total net retail inflow into all US individual stocks that day. This means that for roughly every $4 of incremental retail capital flowing into the US market, about $3 flowed into SpaceX.

Given such robust demand for SPCX, SpaceX's underwriters exercised the IPO's over-allotment option (Greenshoe mechanism), purchasing an additional 83.33 million shares. This brings the total number of shares offered in the IPO to 638,888,888 Class A common shares and increases the total offering size to $85.7 billion. This scale surpasses the over-allotment arrangements of almost all major tech company IPOs on record.

Despite this, reports indicate that most eligible retail investors in the US received only about one share during this IPO subscription. Consequently, under extreme supply shortage due to the low float, concentrated buying by retail investors can significantly drive the stock price higher.

What's the Outlook for SPCX?

Zero Hedge: Options Listing Could Push Stock Price to $400

Influential financial media outlet Zero Hedge reported on June 16 that once options trading on SPCX begins, its stock price could be propelled to $400 due to a gamma squeeze, surpassing Nvidia.

Gamma squeeze is essentially an upward spiral triggered by options market makers being forced to chase and buy the underlying stock to hedge. With SpaceX's extremely low public float (4.2%) and exceptionally high retail buying interest, retail investors who haven't yet secured SPCX shares might turn to buying relatively cheaper call options. If a large influx of capital aggressively buys call options, market makers would be forced to hedge their risk by continuously buying SPCX spot shares, thereby pushing the stock price higher and creating a positive feedback loop.

The surge of GameStop (GME) in 2021 is one of the most classic examples of this effect.

Oppenheimer: SPCX Will Continue to Outperform the Market

On June 15, before the US market opened, Oppenheimer analyst Timothy Horan initiated coverage on SpaceX with an "Outperform" rating and set a short-term price target of $190. As US markets opened on Monday, SPCX closed at $192.5, largely in line with Oppenheimer's target.

Timothy Horan is a 4.70-star analyst at Oppenheimer, focusing on the technology, communications, and telecom sectors. According to TipRanks data, his prediction success rate is 58.82%. He views SpaceX as "the only fully vertically integrated AI company," controlling capital, data, large models, hardware, manufacturing, and engineering talent, and should not be valued merely as a traditional aerospace company.

Peter H. Diamandis: Past Idle Funds Went to Bitcoin, Now It's SpaceX

On June 14, renowned entrepreneur, XPRIZE founder, and early SpaceX investor Peter H. Diamandis wrote that SpaceX is the "transcontinental railroad of orbit," enabling a multiplanetary civilization for humanity, creating immense wealth much like the US railroads did in the 19th century. He predicts that within the next year, SpaceX will merge with Tesla to become the first $100 trillion company.

He also stated that for the past decade, whenever he freed up capital from other transactions, he would put it into Bitcoin. But now, whenever he has spare cash, he invests in SpaceX. While he anticipates the stock price will drop when locked-up shareholders are allowed to sell and some cash out, he emphasized that his investment in SpaceX is not about chasing quarterly price gains, but about advancing the off-planet economy.

Brad Gerstner: SpaceX is a Must-Own Asset for Institutional Investors

On June 16, prominent Silicon Valley investor Brad Gerstner described SpaceX as a must-own asset for institutional investors on the latest episode of the BG2 podcast. He based this on the company's dual focus on the space economy and the expansion of AI computing power.

Gerstner noted that bearish investors focus on SpaceX's last year's revenue and investment banks' forecasts for significant revenue growth over the next three years, questioning how few companies can achieve multi-fold expansion in three to four years. However, he argued that if an investor believes in the trajectory of AGI, they must accept the premise that the global computing power required will far exceed current market expectations. Combining this judgment with SpaceX's core business, he finds it hard to identify another company or entrepreneur offering a more direct bet on the future.