Count down to SpaceX IPO begins

00:00:00: As investors try to digest rising energy prices, hotter inflation figures and a technology-led market sell off attention is now shifting toward what could become the largest IPO in history.

00:00:13: with a valuation approaching one point eight trillion US dollars and strong investor demand, SpaceX will be priced today.

00:00:21: And we'll go public tomorrow and has obviously the potential to reshape market flows.

00:00:27: but how?

00:00:28: We will discuss in this episode.

00:00:29: so welcome to Swiss Codes Daily Market Talk.

00:00:33: it's eleventh of June.

00:00:34: I'm Ipeco Scaradeschkea.

00:00:41: Please keep in mind that opinions are my own and this is not financial advice.

00:00:54: But let's start with the boring stuff.

00:00:56: US inflation data came in as strongly as expected yesterday, headline inflation hit a four point two percent level In May while core inflation advanced to two-point nine percent year over year due to the Middle East.

00:01:10: war led rise and energy prices Now if this was good news obviously but numbers were broadly priced in And could have given actually some relief to investors.

00:01:19: Hadden the middle east tensions escalated To send oil price three percent higher in yesterday's trading session and inflation expectations up along with them.

00:01:29: So, the S&P five hundred fell one point sixty-two percent while NASDAQ hundred tank two percent with technology leading losses at a moment.

00:01:38: The bubble fears are rising and just before the biggest IPA of all times this morning US script rose past ninety three dollar per barrel level Before easing on.

00:01:49: I don't know what optimism but European indices are clearly under pressure is first interest rate hike in almost three years later today, and hope to fight the rising inflation with clearly the wrong but only available rate weapon.

00:02:09: while U.S.

00:02:10: indices are a better bid as world's attention is now shifting toward what will become the worlds biggest IPO of all time.

00:02:19: SpaceX is set to be priced today & expected to make its stock debut Tomorrow, June twelfth at a valuation approaching the one point eight trillion US dollars making it one of the world's most valuable companies from day One.

00:02:33: The man is reportedly strong very strong!

00:02:36: The IPO has reported that over subscribed more than four times and some major index providers are preparing to include the stock shortly after its listing.

00:02:46: but now that S&P refused to include SpaceX into this indices before a year which is extremely comforting to me in a way that S&P actually cares more about long-term quality of their indices than short term hype, but others like Nasdaq and Russell for example will be jumping straight in as a result.

00:03:08: And given the size off IPO and Hype latest news demand will likely be strong with real question for investors is whether the stock can live up.

00:03:19: So, there are obviously two major scenarios.

00:03:22: The first one being the bull forever scenario and the scenario investors take a chance in this futuristic company that gets a pallet of businesses.

00:03:33: futuristic businesses, including already existing ones like Satellite Internet for example which is a starling.

00:03:40: Social media platform x.com formerly known as Twitter an AI model called GROG and AI infrastructure following the integration of XAI which was home to x. com grog and the AI infrastructure itself.

00:03:56: So those are existing businesses, but more excitingly Spacex has got this not yet existing business space AI infrastructure And that is actually gathering all the hype in the world.

00:04:08: so In this bully scenario where investors will be dreaming of The sky and the space and space an orbital infrastructure?

00:04:16: This space X stock could eventually surge after its listing and pulled entire space ecosystem them higher with it.

00:04:24: But no, that because markets are so efficient and investors are so smart.

00:04:28: Well they have already took a chance to listed space and defense names into the SpaceX IPO.

00:04:34: So stocks such as Rocket Lab Redwire is the Space Mobile Intuitive Machines & Voyager Technologies All of these companies have enjoyed strong speculative flows As Investors search for their next SpaceX proxy.

00:04:51: We've seen certain pullbacks since the beginning month where we saw peak levels in many of these stock prices, but many are still meaningfully up compared to the same time last year for example.

00:05:03: So their valuations today make this second scenario a little bit more likely.

00:05:09: Sell the new scenario, because existing space shares already benefited from the pre-SpaceX hype as I said.

00:05:16: While they could eventually suffer from capital rotating to the new superstar of the Space even though all goes well and maybe especially if things go well for SpaceX And while the sell off could obviously extend beyond the space industry into other technology pockets aftermarket that have gone more parabolic in the late the latest months of trading, why?

00:05:40: Because at valuation approaching US dollars and a fundraising target of roughly US dollar, the SpaceX IPO will likely create a big liquidity vacuum.

00:05:53: To absorb this huge amount of liquidity investors both institutional and retail may have to sell their existing holdings free some cash for their SpaceX allocations.

00:06:04: This is also the reason that could partly explain the recent sell-off we saw across shipmakers, even though a part of those sell off was attributed to economic data supporting a hawkish Federal Reserve policy and a parabolic rally calling for correction as well!

00:06:22: So if investors rotate their cash from existing technology names.

00:06:27: many of them have rallied hardest ahead.

00:06:30: this IPO could experience significant profit taking in a way to trigger short-lipped frenzy around SpaceX, whether we are talking about the space shares themselves or other technology holdings.

00:06:44: And I'm especially looking at huge makers.

00:06:47: then Once initial shock behind, when the dose settles say in a few months from now if SpaceX does well and survives initial hype.

00:06:56: And If the company convinces investors around the world that space business will generate revenue in a reasonable timeline other Space companies could also benefit from new business outlook in space and space companies would eventually be next big thing led by SpaceX.

00:07:15: Who knows, that's the bullish case scenario but unfortunately well things could not go according to Elon Musk plans.

00:07:22: suddenly investors realize out there putting their money into something while it's going to be very difficult to realise or that would take years and even a lifetime before anything in space can generate revenue.

00:07:36: So unsurprisingly, opinions in the market diverge on something this size fiction-worthy.

00:07:42: Retail investors chasing their next great wave loathe the speculative potential behind SpaceX IPO.

00:07:48: Institutions are also reportedly oversubscribed but some are still skeptical.

00:07:53: A Danish pension fund for example said that it won't take a chance at SpaceX as it is grossly validated and has governance structure.

00:08:05: They're talking about Elon Musk's EAT.

00:08:07: FIVE PERCENT VOTING RISE IN THIS COMPANY!

00:08:10: Then Morning started valuing the company to less than half of what Elon Musk thinks it is.

00:08:16: Now looking at numbers, as much we can find these numbers, at current valuation space X looks worth almost HUNDRED times its sales of last year.

00:08:26: And this is a valuation based on what SpaceX could become in ten years, which I think it stretched and not necessarily taking into account the speed at which the company burns cash to finance the monstrous cost of building data centers in space.

00:08:40: So my base case scenario that SpaceX enjoys its strong debut?

00:08:44: The combination of Elon Musk AI Starling Space Exploration an index inclusion simply too powerful to be ignored because remember some major index providers such as Nasdaq and Russell will include SpaceX in their indices very shortly, an entropic predicts that about thirty percent of space X-free float is set to be owned by passive investors through these indices.

00:09:09: So Lerner will ramp up demand whether you want to invest in SpaceX or not and support the bullish price action unless people start selling their NASDAQ and Russell indices due to SpaceX inclusion.

00:09:21: But the valuation is still very much eye-watering for a business that has yet to exist and turn profitable in an extra terrestrial setup.

00:09:29: And amount of shares that will inundate market from this week, To end off this year with upcoming Anthropaik and open AI IPOs are sure increase technology share supply.

00:09:42: after years of shared buybacks conducted by big tech companies that reduce supply and somehow supported prices And in the light of the latest developments inside SpaceX, SpaceX could eventually be valued less as a space company and more one among many, and probably more to come in a market where supply is rising.

00:10:09: In that case this name will continue reflecting the dream of far away future.

00:10:13: but SpaceX's valuation may be much less stellar than its names suggest weighing on the market prices and valuations.

00:10:26: So let's see, it is going to be very exciting.

00:10:28: but this all for today!

00:10:30: I'm Ipek Oskar Deshkaya.

00:10:32: Thank you for joining me And thank you for your beautiful and supportive comments.

00:10:38: This episode of Market Talk has been helpful and insightful so please do not hesitate to leave your comments, reactions and questions below.

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