SpaceX’s Upcoming IPO: A Market Test
SpaceX is slated to go public on June 12th, and many are watching this closely as it could serve as a significant test for the market. Recently, the company revealed it has cut its target valuation by approximately $200 billion, yet it still aims to sell initial shares that would value it around $1.77 trillion.
If the stock does poorly and sees a significant drop on its debut, it might cause some negative sentiment across the market in the short term. Conversely, if it performs well, it could highlight that investors still have a strong appetite for growth stocks, potentially igniting another wave of enthusiasm.
This brings us to take a look at two stocks that might benefit if SpaceX’s debut amplifies the overall upbeat market atmosphere.
1. Micron
Micron (MU 12.36%) was quite successful last year, especially within the realm of artificial intelligence (AI) trading, influencing the wider market landscape. Its stock has skyrocketed by 898% over the last year, with several analysts on Wall Street predicting further gains.
For instance, Susquehanna recently revised its one-year price target for Micron to $1,750 per share, citing a notable increase in DRAM memory prices—up 50-60% quarter-over-quarter—as a driving factor. Additionally, anticipated rises in NAND memory prices by 75% to 100% on a quarterly basis bolster this bullish outlook.
As a significant provider of high-bandwidth memory chips and memory solutions for AI and data centers, Micron has enjoyed impressive growth. Demand is likely to remain strong for some time. It’s worth noting that while Micron isn’t entirely dependent on broader market movements, its influence on market trends is considerable.
If SpaceX’s IPO goes well and its valuation increases, this could further strengthen the optimistic mood around Micron, potentially pushing its stock even higher. However, Micron’s long-term success isn’t entirely tied to how SpaceX performs, although a robust market can certainly help.
2. Rocket Lab
Similar to SpaceX, Rocket Lab (RKLB 8.23%) offers launch services for various technologies, enabling others to place their satellites into orbit. They’ve also expanded into satellite production and partnered with SpaceX. Recently, they secured a contract with the U.S. Space Force to manufacture and operate geostationary satellites.
Despite some recent downturns, Rocket Lab’s stock has increased around 74% this year. It’s interesting to note that their rating downgrades have been heavily influenced by recent news surrounding SpaceX. An explosion at a Blue Origin launch pad on May 28 certainly impacted Rocket Lab’s stock as well.
SpaceX could have aimed for a $2 trillion valuation, but it’s now targeting a lower IPO price of $135 per share, commanding a valuation of $1.77 trillion instead. While this still positions SpaceX to have the largest IPO ever, the decision to lower its price has reverberated throughout the industry.
Consequently, Rocket Lab’s stock is down about 20% from its peak, although its valuation is still substantially reliant on growth. Currently, it stands at about $70 billion, reflecting a valuation approximately 77 times this year’s expected sales.
If SpaceX’s stock performs well post-IPO, it’s quite likely that other space technology companies will also experience a surge. In that case, Rocket Lab’s stock could rise along with it.
