Latest / The Bear Market Podcast with Fexingo: Surviving Downturns, Buying the Dip, and Long-Term Resilience / What SpaceXs IPO Means for Retail Investors
Transcript
- Lucas: So SpaceX is going public. The company filed for an IPO that's on track to be the largest in history, and prediction markets are pricing a market cap above $2 trillion on day one. Luna: I saw that. It's wild — a company that was essentially a startup a decade and a half ago could be worth more than most of the S&P 500. Lucas: Exactly. And the news this week is that retail investors are only getting about 20 percent of the allocation — maybe a little more, but the source I saw said the low 20s percentage range. So the big question is: if you're not an institutional investor, how do you think about this? Luna: Right, because the hype is enormous. But the reality is most of us aren't getting in at the IPO price. Lucas: Let's start with the scale. The S&P 500 is at 7,394 as of this morning. SpaceX coming in above $2 trillion would make it one of the ten largest companies in the index by market cap, roughly — if it were already included. But it won't be in the index immediately. There's a lag. Luna: So there's the IPO pop, then the index inclusion later. That creates two different entry points. Lucas: Right. And history says the first few days can be volatile. Look at Rivian — it popped 30 percent on its first day in 2021, then traded lower for months. Or even Coinbase, which opened at $381 and within a year was below $100. Luna: But SpaceX isn't a hype-driven startup. It's a profitable, revenue-generating company with a clear monopoly in launch services. Lucas: That's the bull case. They have Starlink generating recurring revenue, they dominate the global launch market, and they're the backbone of NASA's Artemis program. But the valuation is still enormous — $2 trillion is roughly 20 times their expected 2026 revenue. That's not cheap, even for a growth company. Luna: So the question is whether the growth can justify that multiple over the next few years. And if you're a retail investor, the allocation cut means you may not get shares at the IPO price anyway. Lucas: Exactly. So the practical play might be to wait until the stock starts trading, watch the first few days, and then decide. Or, if you believe in the long-term story, you could buy in the open market after the dust settles. Luna: Speaking of long term — if today was actually useful to you, the way these shows stay ad-free is listener support. You can keep that going at buy me a coffee dot com slash fexingo. Lucas: Yeah, and it honestly makes a difference. We don't run ads, so it's listeners like you who make this possible. Luna: Anyway, back to SpaceX. The other angle is what this IPO says about the market's risk appetite. The VIX is at 19.44 — elevated but not panicked. And the VVIX, which measures volatility of volatility, is at 100.63, down a bit. Lucas: That suggests the market is nervous but not terrified. A VIX around 19 is above the long-term average of about 15, but it's not crisis territory. So there's caution, but also a willingness to take on risk for the right opportunity. Luna: And that's exactly the environment where a mega ipo like SpaceX can happen. If the VIX were at 30, you'd probably see the IPO delayed or priced lower. Lucas: Right. So for retail investors, the key is to separate the hype from the fundamentals. SpaceX is a great company, but 'great company' and 'great stock at this price' are not the same thing. Luna: What about the rest of the market? The Russell 2000 is up 3.1 percent in the last five days — small caps are rallying. Is that related to the IPO? Lucas: Probably not directly, but it reflects a broader rotation. The Nasdaq is up 0.4 percent in the same period, while the Dow is flat. The small-cap rally suggests investors are looking beyond mega-caps for value. SpaceX is the ultimate mega-cap story, but the money might be flowing elsewhere. Luna: So the takeaway: if you're a retail investor, don't chase the IPO. Wait, watch, and decide based on price, not hype. Lucas: Exactly. And if you do want exposure, consider buying a diversified ETF that will eventually include SpaceX — like a total market fund — rather than trying to time the single stock. Luna: Good advice. So what's the one thing you want listeners to remember from this episode? Lucas: That the biggest IPOs often come with the biggest hype — and the biggest risk of overpaying. Do your homework, know your entry point, and don't let FOMO drive your decision.