Investors who sold their SpaceX shares soon after the company’s IPO are now feeling quite regretful as the stock price surged by 50%. However, early trading options suggest that there’s a fair amount of skepticism about whether this boom can be sustained.
By the end of Tuesday, the stock had nearly doubled in value during its first three days, briefly making Elon Musk the wealthiest person in the world and propelling SpaceX’s worth past that of both Amazon and Microsoft.
“We all feel foolish for not buying at $135,” remarked Allen Tran, who heads an investment group called Haiku Trading. He made a five-figure sum from trading SpaceX stock on Friday after its Nasdaq debut.
Tran figures he missed out on around $60,000 in profits—barely scratching the surface of how many “flippers” are now regretting their quick sales following SpaceX’s extraordinary leap from an opening price of $150 to $218 per share.
On Wednesday, however, SpaceX’s stock dipped by 3.5%, marking its first decline since trading began, raising alarms about the company’s high valuation.
This drop still leaves SpaceX firmly in sixth place among the world’s most valuable publicly traded companies.
Chris Murphy, a strategist at Susquehanna Financial, indicated that the pricing trends on the first day of options trading for SpaceX suggested a 15% chance the stock might rise another 50% by September, but there’s also a 13% risk it could fall by the same amount.
“The large trades are looking more like hedges against future supply concerns,” Murphy noted. He observed a mix of optimism and caution, as calls indicate a desire for further significant gains, while bearish puts indicate worries about potential supply and excessive valuations, which could undermine initial excitement.
There’s a sense that it’s tricky to position trades—buying seems costly, yet selling raises red flags as well.
About 1.8 million SpaceX option contracts exchanged hands on Tuesday, breaking the first-day record previously held by Meta in 2012.
Some bullish investors maintain that the stock is influenced by excitement across sectors like space travel, AI, and tech, with the hope that earnings will eventually align with its lofty valuation.
Yet, skeptics remind us that both Amazon and Microsoft reported much higher earnings than Musk’s company; for instance, Amazon earned $77.7 billion last year, while Microsoft posted $101.8 billion in profits, contrasting sharply with SpaceX’s reported loss of $5 billion.
Concerns about SpaceX’s heavy investment in AI, especially with the recent announcement to acquire the coding startup Cursor for an eye-watering $60 billion, have also raised eyebrows among investors.
In various discussions, traders are mulling over whether it’s still worth entering the SpaceX market. Tran reflected, “I would have made out better if I hadn’t sold anything,” adding he was taken aback by SpaceX’s sudden popularity.
Prior to SpaceX’s trading launch, investors could seek shares through brokerages like Fidelity and Robinhood, which typically discourage early sell-offs of IPOs.
Fidelity cautioned customers that if they sold their IPO shares within the first 15 days, they would be cut off from acquiring shares in future debuts.
Aaron Cook obtained one share before the debut, bought another eleven afterward, and sold off about half of his total shares over the weekend.
“I just mitigated my risk,” recounted the 29-year-old. “Twenty percent gains three days in a row? Who would expect that?”
Forde Todd, a 20-year-old college student from Philadelphia who sold some shares on Tuesday, expressed his astonishment at the stock’s climb, noting, “I’m being a bit cautious… you’re paying a pretty high premium.”
Conversely, Devin Powell, a 48-year-old from Arlington, Texas, and an avid Musk supporter, disagreed, suggesting, “He’s reached a point where he’s almost too big to fail.”
