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SpaceX stock erases all its gains and slides below IPO price in intraday trading

latimes.com

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Re: SpaceX stock erases all its gains and slides below IPO price in intraday trading

#101

Post by trescenzi »

ToValueFunfetti wrote: post #82
ornornor wrote: post #41

“Shocking nobody” I would add… This is an obvious Musk scam and anyone with financial knowledge called it as such ever since it’s been on the table. Why else lobby and change the NASDAQ listing rules for instance?

This is shaped like more-or-less every IPO I've seen. I think you have to wait for more of a collapse to claim dispositive evidence of a scam (or widen your claim to 'almost all IPOs are scams').

This is something you could empirically study. Looks like this NASDAQ study from a few years back has some numbers. At 3 months, that’s what’s in their chart, it’s still about 50/50. At 3 years it’s 29% with returns greater than 10% and 69% with returns greater than -10%.

https://www.nasdaq.com/articles/what-happens-to-ipos-over-th...

Re: SpaceX stock erases all its gains and slides below IPO price in intraday trading

#102

Post by gambiting »

CrimsonRain wrote: post #90
epistasis wrote: post #81

Earlier quoted context omitted.

What you describe is exactly a scam: he somehow convinced you that he's not motivated by wealth! That alone is clearly a scam, the idea that Musk is not motivated by huge amounts of wealth and high valuations is just implausible considering g his behavior at every single turn.

What is he doing with all that wealth? Taking lavish vacations? Buying luxurious yacht? Buying islands and making bunkers?

[flagged]

Re: SpaceX stock erases all its gains and slides below IPO price in intraday trading

#103

Post by abtinf »

I’m way out of my depth in suggesting this idea, so forgive me if I’m committing a conceptual “divide by zero” and it’s not even wrong:

It seems like the SpaceX IPO really breaks the traditional notion of market cap.

Market cap has an unstated assumption that most of a company’s stock could, in theory, be traded unencumbered. Thus shares * price gives a very rough view of the value of the company. Everyone understands that this valuation has problems: it attributes the last marginal trade to the entire stock, and doesn’t account for large purchases/sales. But it’s useful nonetheless.

But with SpaxeX, only a tiny fraction of those shares are even theoretically tradeable, so it seems bizarre to calculate valuation using price * shares. I think this is the source of discomfort around the $2T market cap.

It seems like, similar to how there are long and short term liabilities, there should be long and short term market caps.

“Short term market cap” would be price * “number of shares that could theoretically be available for trade within the next year”, from all sources (including vesting employee options, expiring lockups, etc).

“Long term market cap” would be price * total authorized shares.

So SpaceX’s long term market cap would remain at $2T and its short term market cap would be, say, 5% of that (about $100B).

Re: SpaceX stock erases all its gains and slides below IPO price in intraday trading

#104

Post by cmiles8 »

There’s still really nothing keeping it at even these lower levels except pure hype. By the fundamentals typically applied to aggressive growth companies a “sane” price is closer to $40-60 and even that would be very aggressive considering the company’s financials.

If the company doesn’t quickly show a financial picture that matches the sky high pro formas then even anything close to those levels will become extremely hard to justify.

The bond markets have already turned very negative on SpaceX with extreme red flags developing there.

Re: SpaceX stock erases all its gains and slides below IPO price in intraday trading

#105

Post by infecto »

bobro wrote: post #86
infecto wrote: post #60

Earlier quoted context omitted.

I don’t think scam is the right word. The valuation and bank price targets are absolutely insane. I myself could never invest at those multiples. I think they absolutely have governance problems but at the same time I have to admit he is a great financial engineer. Investors who do have conviction here most likely see this as the platform vehicle for everything else coming through the pipeline. Again I could not buy…

Can you spell out a bit more how these three thoughts live together consistently for you: 1) The price is insane 2) The price is a work of great financial engineering 3) The price isn’t a scam

They're perfectly consistent. An absured valuation isn't evidence of fraud. Exceptional capital formation isn't fraud either. You're conflating overpriced, good at raising money and scam as if they're synonyms. I am curious how the absurd bank price targets will play out in the long-term and if there will be any repercussions but its hard to immediately jump to scam but I realize this is the favorite fan-fic for folks on both sides.

Re: SpaceX stock erases all its gains and slides below IPO price in intraday trading

#106

Post by jmye »

ToValueFunfetti wrote: post #82
ornornor wrote: post #41

“Shocking nobody” I would add… This is an obvious Musk scam and anyone with financial knowledge called it as such ever since it’s been on the table. Why else lobby and change the NASDAQ listing rules for instance?

This is shaped like more-or-less every IPO I've seen. I think you have to wait for more of a collapse to claim dispositive evidence of a scam (or widen your claim to 'almost all IPOs are scams').

> (or widen your claim to 'almost all IPOs are scams')

In a world where retail basically has no access to true IPO pricing, I don't think this is untrue for the majority of investors.

Jamming SpaceX directly into a bunch of indexes just because Musk wanted it (and everyone is a coward or complicit) stunk of "scam" in a very different way, though.

Re: SpaceX stock erases all its gains and slides below IPO price in intraday trading

#107

Post by rsynnott »

abtinf wrote: post #103

I’m way out of my depth in suggesting this idea, so forgive me if I’m committing a conceptual “divide by zero” and it’s not even wrong: It seems like the SpaceX IPO really breaks the traditional notion of market cap. Market cap has an unstated assumption that most of a company’s stock could, in theory, be traded unencumbered. Thus shares * price gives a very rough view of the value of the company. Everyone understand…

Nah, it's fairly common for only a relatively small part of a company to be tradeable.

Re: SpaceX stock erases all its gains and slides below IPO price in intraday trading

#108

Post by throw0101d »

vv_ wrote: post #13
paoliniluis wrote: post #3

The IPO was meant for the VCs to cash out as all fundamentals were completely irrational, but seems like no one cares about cash flow and profitability anymore during QE times. Dumb money will keep being dumb I guess

If no one cared about cash flow and profitability wouldn't SpaceX stock go up instead of down?

> If no one cared about cash flow and profitability wouldn't SpaceX stock go up instead of down?

In addition to looking at the "fundamentals" of a company like cash flow and profitability, there is also a 'meta-game' that traders (as opposed to investors) have to look at:

> A Keynesian beauty contest is a metaphorical beauty contest in which judges are rewarded for selecting the most popular choices among all judges, rather than those they may personally find the most attractive. This idea is often applied in financial markets, whereby investors could profit more by buying whichever stocks they think other investors will buy, rather than the stocks that have fundamentally the best value, because when other people buy a stock, they bid up the price, allowing an earlier investor to cash out with a profit, regardless of whether the price increases are supported by its fundamentals and theoretical arguments.

* https://en.wikipedia.org/wiki/Keynesian_beauty_contest

"whereby investors could profit more by buying whichever stocks they think other investors will buy, rather than the stocks that have fundamentally the best value"

Re: SpaceX stock erases all its gains and slides below IPO price in intraday trading

#109

Post by Beijinger »

abtinf wrote: post #103

I’m way out of my depth in suggesting this idea, so forgive me if I’m committing a conceptual “divide by zero” and it’s not even wrong: It seems like the SpaceX IPO really breaks the traditional notion of market cap. Market cap has an unstated assumption that most of a company’s stock could, in theory, be traded unencumbered. Thus shares * price gives a very rough view of the value of the company. Everyone understand…

No, shares are shares. Public or not.
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