Latest / Stock Picking with Fexingo: Individual Equities, Research, and Building a Concentrated Portfolio / Why SpaceX IPO Is Redefining Public Market Investing
Transcript
- Lucas: So SpaceX officially filed for its IPO yesterday, and the numbers are staggering. They're looking to raise seventy-five billion dollars — that would make it the largest IPO in history by a wide margin. Luna: Seventy-five billion. That's more than the entire market cap of most companies on the S&P 500. How is that even possible? Lucas: Well, it's not just the raise — it's the valuation. Prediction markets are already pricing SpaceX above two trillion dollars in market cap on its debut. That would put it in the same league as Apple and Microsoft. Luna: And yet, retail investors are only getting a sliver. Reports say the retail allocation is in the low twenty percent range. Lucas: Yeah, that's a big theme here. The underwriters are prioritizing institutional investors — think sovereign wealth funds, mutual funds, pension funds. Retail gets the leftovers. But given the demand, even twenty percent is a lot of shares. Luna: So if you're a regular investor, how do you even get in? Is it just via the IPO or do you wait for the secondary market? Lucas: That's the million-dollar question. For most retail investors, the easiest path will be buying on the open market once trading starts. But the opening price could be well above the IPO price — that's typical for hot tech IPOs. Remember when Airbnb debuted at sixty-eight dollars and opened at one forty-six? Luna: Right, so the pop might already be priced in by the time you can buy. But is the hype justified? SpaceX is a private company — we don't have the same financials as a public company. Lucas: We do have some data. SpaceX has been profitable for a few years now, mostly from its Starlink internet service. Launch revenue from NASA and commercial customers is steady. The growth story is all about Starlink and Starship. Luna: But a two trillion dollar valuation? That implies massive future cash flows. It's a bet on Starship transforming space travel and Starlink dominating global broadband. Lucas: Exactly. And that's where the stock-picking challenge comes in. If you buy SpaceX at two trillion, you're assuming it will be worth much more in five to ten years. That's a concentrated bet with huge upside and huge risk. Luna: So for a concentrated portfolio, SpaceX could be a core holding — but you'd need to really believe in the narrative. What do you think, Lucas? Is it a buy? Lucas: Look, I'm not making a recommendation here. But I can say that the early investors — the ones who took a chance on SpaceX when it was a startup — are now sitting on enormous gains. The question is whether the public market is pricing in all the good news already. Luna: And that's the classic IPO dilemma. The people who know the company best are selling. The retail buyer is buying from them. Lucas: On that note — and I know this is a bit of a shift — but it ties back to how we think about investing. Our show is ad-free and listener-supported, and it's because of a handful of people who chip in monthly through buy me a coffee dot com slash fexingo. That support literally funds the research and time we put into episodes like this. Luna: Yeah, it's a small group, but it makes a huge difference. Keeps us independent and focused on stocks we find interesting. Lucas: So back to SpaceX. One angle I find fascinating is the retail allocation being cut to the low twenties. That means institutions get the lion's share, which could actually create more volatility on day one. Luna: Why more volatility? If institutions are long-term holders, shouldn't that stabilize the stock? Lucas: Normally, yes. But with such a high-profile IPO, many institutions might flip the shares for a quick profit. Combined with limited retail supply, you could get wild swings. We saw that with Rivian — it popped, then crashed. Luna: So the lesson is: don't chase the opening day pop. Wait for the dust to settle. Lucas: Right. And that's where disciplined stock picking comes in. You don't need to own every hot IPO. You need to own businesses you understand and can value. SpaceX is tough to value because it's unique. Luna: What comparable would you use? Boeing? Lockheed? Or maybe a tech giant like Amazon? Lucas: It's a hybrid. For Starlink, you could compare it to other satellite broadband providers or even telecoms. For launch services, think of it as a space logistics company. But Starship is a moonshot — literally. That part is priced like a venture bet. Luna: So when you build a concentrated portfolio, you might allocate a small percentage to such high-conviction bets. But you need a margin of safety. Lucas: Exactly. And with the IPO likely in the next few weeks, we'll have more data. The prospectus will reveal revenue breakdown, customer concentration, and profitability. That will help investors decide. Luna: I'm also curious about the broader market context. The S&P 500 is near seven thousand four hundred, small caps are up over three percent in the last week. Does a SpaceX IPO signal a peak in risk appetite? Lucas: It could be a sentiment indicator. When the biggest private company goes public at a massive valuation, it often happens near market tops. But it's not a rule. The IPO market has been quiet for a while — this could reignite it. Luna: So for stock pickers, SpaceX is a story to watch, not necessarily to trade. The real opportunity might be in the companies that supply SpaceX or benefit from lower launch costs. Lucas: That's a great point. Companies like Maxar Technologies or Iridium Communications could see indirect benefits. Even Amazon's Project Kuiper competes with Starlink, so Amazon might need to invest more. Luna: So the ripple effects of this IPO could be huge. We'll be covering it closely. Lucas: Definitely. Next episode, we'll dig into the financials from the S-1 once they're public. For now, the key takeaway is: if you're building a concentrated portfolio, SpaceX is a name to research, not just to buy on hype. Luna: And don't forget, you can support this kind of deep-dive research at buy me a coffee dot com slash fexingo. It helps us stay independent. Lucas: Alright, that's all for today. We'll be back tomorrow with more.