Latest / The Bear Market Podcast with Fexingo: Surviving Downturns, Buying the Dip, and Long-Term Resilience / SpaceX IPO and the Retail Allocation Reality
Transcript
- Lucas: So SpaceX officially filed its IPO, and the numbers are staggering — they're aiming to raise $75 billion, with a target market cap north of $2 trillion. But here's the part that's getting less attention: retail investors are only getting a sliver of the allocation, reportedly in the low 20% range. Luna: Low 20% — that's surprisingly small. I'd have thought with all the hype, they'd want to spread the love to Main Street. Lucas: You'd think, but the reality is that big institutional investors — pension funds, mutual funds, sovereign wealth funds — get the lion's share. And there's a reason: they're sticky, long-term holders. Retail tends to flip shares faster, which creates volatility that issuers and underwriters don't love. Luna: So the message for the average listener is: you probably won't get a meaningful allocation in the IPO itself. Lucas: Exactly. If you're a Fidelity or Schwab customer with a few thousand dollars, you might get a token allotment — maybe 25 or 50 shares. But the real money is going to the big players. And that's actually fine, because you can still get exposure through index funds. Luna: But does the S&P 500 even include SpaceX yet? I thought it had to be listed for a quarter before index inclusion. Lucas: It does — normally there's a waiting period. But here's the thing: the S&P 500 is already pricing in SpaceX's impact indirectly. The index is up 0.3% in the last five days, and a lot of that is anticipation. Plus, companies that are likely to benefit from SpaceX's supply chain — think satellite manufacturers, launch providers, even some defense contractors — are already in the index. Luna: So you're saying an S&P 500 index fund investor already has a piece of the SpaceX story, just not the stock itself. Lucas: Exactly. And that's actually a more resilient way to play it. Remember, the Russell 2000 is up 3.4% in the same period — small caps are rallying hard. That suggests money is rotating into areas that aren't just the mega-cap tech names. Luna: Which brings us back to the IPO allocation issue. If retail is locked out, what's the alternative? Buy on the open market on day one? Lucas: You could, but history is brutal for that. IPOs that pop on debut often give back gains in the following weeks. And with a $2 trillion-plus valuation, the upside is already priced in. The real question is whether SpaceX can deliver earnings growth to justify that multiple. Luna: And the VIX at 18.85 suggests the market isn't terrified, but it's not complacent either. The VVIX at 98 — that's up 6% in five days — tells me options traders are hedging for tail risk. Lucas: Good catch. The VIX itself is below 20, which is moderate, but the VVIX spike says volatility of volatility is rising. That's often a sign that big money is positioning for a shock. Could be the IPO itself, could be something else. Luna: So for listeners who want to buy SpaceX: wait for the dust to settle, use index funds for core exposure, and don't chase the first-day pop. Lucas: That's the grounded take. And look, if our money conversations have helped you think about a decision like this differently — maybe you've avoided a costly mistake or rethought your strategy — that's exactly what we're here for. Luna: Yeah, we keep this show ad-free and independent, and the only reason we can do that is listeners who chip in a couple of dollars a month. Lucas: It genuinely makes a difference. If you've gotten value from the show, you can support us at buy me a coffee dot com slash fexingo. That's buy me a coffee dot com slash fexingo. Luna: And even a small amount helps us keep bringing you these conversations. Now, back to the IPO — one thing I find fascinating is the prediction market data. Traders on Polymarket are pricing a >$2 trillion market cap on debut. Lucas: Right, and that's a different kind of signal. Prediction markets aggregate a lot of dispersed information. If they're right, SpaceX would instantly be among the top 10 companies in the world by market cap. That's a lot of faith in Elon Musk's vision. Luna: But also a lot of risk. If Starlink's revenue doesn't grow as fast as expected, or if Starship hits delays, that valuation could compress quickly. Lucas: Exactly. And that's why the retail allocation debate matters — because if you're shut out of the IPO, you might feel pressured to buy at any price on the open market. That's when discipline goes out the window. Luna: So the takeaway is: stay patient, use index funds, and if you really want SpaceX stock, wait for a pullback after the initial euphoria. Lucas: And keep an eye on the VIX term structure. If the VIX stays below 20 and the VVIX starts to drop, that's a sign volatility expectations are normalizing. Until then, a little caution is warranted.