SpaceX IPO: Why It Could Skyrocket Then Plummet

Summary

Get ready for the SpaceX IPO, poised to be the biggest in history and exceptionally volatile. While SpaceX reported $18.7 billion in revenue last year, it also incurred a net loss of nearly $5 billion. However, its Starlink division is a powerhouse, generating $11.4 billion in revenue and a $4.42 billion profit, effectively acting as the company's cash cow. This profit is being reinvested into space and AI initiatives. Despite current losses, SpaceX's S1 filing reveals an estimated market cap between $1.75 and $2 trillion. A key factor for traders is the significantly limited float of shares available in the IPO, estimated at only 4% of total shares outstanding. This scarcity, combined with high demand, could lead to dramatic price surges, potentially exceeding 100% in the first few weeks. However, this initial surge is expected to be followed by a decline once insider lock-up periods expire, typically around 6 months post-IPO, leading to heavy selling pressure. For long-term investors, waiting for this post-lockup period to establish support levels is advised, while active traders may find opportunities in the initial volatility.