This is shaped like more-or-less every IPO I've seen. I think you have to wait for more of a collapse to claim dispositive evidence of a scam (or widen your claim to 'almost all IPOs are scams').

I don’t think scam is the right word. The valuation and bank price targets are absolutely insane. I myself could never invest at those multiples. I think they absolutely have governance problems but at the same time I have to admit he is a great financial engineer.

Investors who do have conviction here most likely see this as the platform vehicle for everything else coming through the pipeline. Again I could not buy into that but I think it’s a far cry from a scam.

Doesn't need to be said but "Thank you for being the top comment." Shocking nobody, indeed.

Yes, it is an obvious scam, but as far as I understood, it was a scam that was guaranteed to succeed: SpaceX is listed on Nasdaq and added to the Nasdaq index after only two weeks thanks to the rules Nasdaq changed at SpaceX's behest, so all funds that track Nasdaq have to buy SpaceX shares, so the prices were going to explode automatically because they made sure there will not be enough shares available. What went wrong? Are SpaceX employees dumping their shares so fast that supply outstrips demand?

I warned people 2 months ago:

https://news.ycombinator.com/item?id=48368668

It really showed which financial commentators should be ignored. Hearing some of them speak was just painful.

And it worked. And whatever schemes he has in mind to have Space X merge with Tesla to increase market cap further will work too.

What's the point of an IPO? Show problematic institutional investors the door and replace them with disorganized public investors? Attract talent?

Seems like if the company is really doing great you'd want to retain ownership. Raise from bonds or something. Put simply, if it's valuable why would anyone sell it?

It's ok. Let the Musk-riders enjoyed their ride ...

Elon bought them an imaginary horse ...

Some would still say Tesla is a scam.

So I presume you made a lot of money shorting the stock if you were so confident?

It's right at IPO price, which (thus far) means it was more or less priced correctly.

Not a scam IMO, I don’t think musk is that motivated by wealth but im sure plenty of the heavy hitter investors are. I’m sure he didn’t complain about the valuation however. I think SpaceX is a solid well run company (praise be to Gwen Shotwel) but $1T is a bit much. I’ll eventually buy in when things settle down and we have a few quarters of financial data to work with.

The IPO featured less than 5% of shares as free float. So the investors are still in pretty deep with their hands tied until lock-up restrictions expire. The IPO was more of a quick, public financing round for their AI branch than an exit for SpaceX VCs.

Is it possible that people who don't care about short term profitability but still want a strategic ownership of the company bought at a high price on IPO day and now that the day traders are in, speculation will readjust the price to short term values? The change of price just reflect the different buyer profiles.

SpaceX is a pretty important company not just for "the market" but also for many other things (see Russia/Ukraine war).

Fair warning: I know nothing about all this.

If no one cared about cash flow and profitability wouldn't SpaceX stock go up instead of down?

No one can care about fundamentals in QE times. If you stay out of the market just because nothing there is valuable, you will lose your money to the hidden inflation and won't be able to buy anything there when you want in.

In normal inflation you can at least buy commodities. But the US economy is organized in a way that will concentrate the money on stocks, not commodities.

Not sure if people not caring about cash flow and profitability is applicable across the board, it might just be because SpaceX is one of Elon's companies which seem to defy traditional financial analytic standards.

Since when are we still in "QE times"?

> AI company, supposedly

Mainly it’s a REIT that bought a bunch of hardware which is now depreciating like fresh lettuce. They don’t even have a way to use it productively for AI purposes themselves and are instead renting it to competitors, who are using it to lap them.

> SpaceX is an AI company without a frontier model.

Unless they manage to build such a model, then their plan looks like they intend to be an AI _infrastructure_ company. Which is probably viable and healthy business! One with lots of competition and low margins that is completely misaligned with their current valuation.

The SpaceX subsidiary SpaceXAI (formerly xAI) is X (Formerly Twitter) and xAI. Things move fast in the trillion dollar valuation world.

In general terms you want the stock to pop.

Your bank will get a ton of orders from institutional investors of how many shares they want at a given price. You will have a preference as to which investors you want on your cap table. Almost all of those investors value your stock less than the "pop price" (which includes the investors you want on your cap table). So you'll need to target the IPO below the "pop price" so you get them on your cap table.

You're probably picking investors based on how likely they'll let you stay on the board / CEO and if you think they're just going to dump the stock during the IPO (which would be bad for it's price).

So (unlike the SpaceX IPO) you're going to sell relatively little shares to retail who will buy at any price which during the opening days will cause it to spike as the demand (in nominal dollars) per share is beyond the IPO price target.

> but is the share price returning to IPO opening not just a sign that the banks accurately estimated something?

Sure they estimated something. But there's a ton of different things that can be estimated.

Many IPOs slide below the initial price. This isn't a SpaceX thing.

> the share price returning to IPO opening not just a sign that the banks accurately estimated something

I mean who knows where it will end up by the end of the year. Meme-stock-hype train could continue or it could reasonably crash far further back down to earth.

> an ideally priced IPO

Ideally priced from the perspective of pre-IPO investors.

This seems like an argument for outside investors not to buy IPO stock.

>If it drops, then I am not sure what the implication is exactly?

Surely you understand it's inverse of an IPO that jumps after intro, right?

SpaceX is not seen by investors as worth its price. This is because it is not.

All of the IPO banks have a public position that SpaceX is actually undervalued and should be at least $200. (Are they telling the truth? lol.)

Market cap has been that sort of fiction from the beginning. It's never been a terribly useful number. There's really no fixing it because the only way to "truly" value a company is to sell it, for real, on the open market. Anything else is just a guess. More or less educated, but a guess. SpaceX isn't creating this problem or making it particularly worse.

What you are describing is what's called free float market cap and is generally what market indices use to weigh stocks. That way you're only trying to replicate the market of stocks that are actually available to trade. There's nothing new about SpaceX in that respect, plenty of companies have float much lower than their total.

You're not wrong, but the weakness you point out isn't a new concept.

Market cap is, at best, a rough valuation of the company. It has many confounding variables of which liquidity can be one of them. That's part of why investment analysts put out price targets for companies. The counterpoint is that market price is driven by what people are actually paying.

One of the major challenges with valuation is settling on a methodology overall. There are many ways, appropriate and not, to value a company. Many will have different estimates for value. There are also factors, like control premium, that start to become relevant when you try to completely acquire a company.

One of the benefits of an open and liquid market is that future availability of locked shares can be priced in early. We all get the benefit of consensus information.

Nah, it's fairly common for only a relatively small part of a company to be tradeable.

No, shares are shares. Public or not.

Different classes of shares are possible, as are other time-varying schemes such as warrants. But that's not what Musk did. The shares all have the same class.

And I don't understand why a serious media outlet is covering this at all. The entire article could be irrelevant the next day.

Without any actual, meaningful news coming out of the company (important financial update, new product, bankruptcy etc), stock price moves are only meaningful to day traders, not anyone who is doing serious investing. LA Times is making themselves the same as CNBC or sources you find on Yahoo finance.

It landed back where it started.

Seems very appropos.

That's good! Because this stock has pretty much nothing to do with the reality of SpaceX or its future. It's a trillion dollar memecoin.

Same here. It's such a shame because I always wanted to invest in SpaceX (even despite it's CEO), but now most of the money would go to AI stuff rather than space exploration, so I'm out.

only if other investors "catch" it...

The Dutch auction wasn't all that smooth, with Google having to adjust prices at the last minute. Most results show that it didn't really produce all that much of a benefit over a traditional IPO, where (the issuing company) at least gets a guaranteed minimum amount of money to raise. Pretty much the only alternative is a direct listing for companies that want to go public, but don't need to raise money. (Well, there's also SPACs, but that's a different beast).

When banks, pension funds and other institutional investors are fighting to outbid each other to get a slice of your IPO why would you care about finding an accurate value and being "fair"? Whether the price goes up and down post IPO isn't really the company's concern. They already have the cash.

thats been replaced with spac deals

also: can't pump the ipo and get exit liquidity for vc through a dutch auction

Google's process produced a price of IIRC $85/share and on first-day trading soared to >$100 so there was a lot of discussion at the time about how efficient that process was.

But really that's how all IPOs work, basically. You have one of more investment banks that underwrite the offering. They're basically guaranteeing to sell a certain number of shares to their clients at a given price. Those clients can be institutional investors, pension funds, high net worth individuals and so on. But there's a feedback loop here where clients might push back on a certain price.

IPOs love these sorts of investors because they tend to buy and not sell. If everyone sells the IPO will flop. Retail investors are far less "loyal".

The IPOing company also has levers where they can manipulate the price, most notably on the supply side ie by limiting or expanding the size of the float. SpaceX's float (as a percentage of the company) was actually really small.

What's unique about the SpaceX IPO was that it would immediately become one of the world's most valuable listed companies so there'd be a lot of induced demand from index funds. The underhanded (IMHO) aspect to all this was that the rules were deliberately changed so passive investors would be exposed almost immediately rather than first allowing some form of price discovery by the market. NASDAQ capitualted. S&P did not.

I guess the real manipulation here is the fiction that SpaceX is an AI company, which ultimately goes back to a series of bailouts for terrible decisions going back to the Twitter purchase. SpaceX's AI pitch was orbital data centers, which make no sense, and using their ill-gotten NVidia chip allocations to rent them to Google.

Many IPO's have the same trajectory that SpaceX did - first going up steeply and then dropping steeply. So there's certainly money to be made if you get the timing right but that is always the challenge.

Over in the past three months I've posted two polls on HN asking if one or both of the OpenAI and SpaceX IPO's would fail, with the definition of failure being dropping below IPO price by the end of the year, or the IPO failing altogether. The votes were against both IPOs succeeding. Albeit with a small sample, the results indicated skepticism early on.

Anthropic could go either way. My guess is that if the financials aren't Enron scale flaming garbage, they'll be fine.

This line of thinking could be applied to literally any company in the world, even to Spirit Airlines 5 minutes before it went out of business.

Not really, it got turbo charged to Nasdaq which involves some involuntary investments.

I'm thinking that over the course of the next 10-18 months the price should continue to come down as pre-IPO shareholders become unlocked and can sell their shares.

Me too, and not for any rational reason or because I value my money or my investing strategies, but simply because I have a high risk tolerance, and it seems like these days that’s all you need to make money.

No real skill, no real research. Just ride the hype train, shrug if you lose, and never gloat when you win. Simply take the profit, stfu, and buy a Porsche or some RAM.

Do yourself a favor and DCA in from here. SpaceX was "only" valued at 210 Billion back in June 2024, around 11% of its current valuation. A return to that valuation would take it down to ~$16/share!

SpaceX is a phenomenal company. I've wanted to buy in since 2009. But the stock is the exact inverse of my ideal single-stock investment thesis--huge downside with severely limited short-to-mid-term upside, given the huge premium already being paid.

Maybe take a look at Rocket Lab :)

It doesn't, because SPCX isn't a space company, it's an AI company with a space hobby. That's what the IPO paperwork says at least.

And I had to scroll all the way down here to find a post that wasn't high octane copium.

People generally hate to see scams stealing money from naive marks. Both SpaceX and Tesla are obvious scams at anything close to their current valuations (despite having real, functional businesses in there! ), that Elon keeps pumping up with ever more ridiculous claims (50 million humanoid robots by 2026/7! Tesla Roadster out by 2024, pre-order now! Starship point-to-point for business travel by 2030! Datacenters in space!).

https://en.wikipedia.org/wiki/Schadenfreude#Psychological_ca...

Because he's a psychopath who is actively making the world worse. Anyone who stands on stage with a chain saw and cuts US AID with a smile on his face is a truly horrible person. Anyone who hoards a trillion dollars while others starve is a truly horrible person. Did you root for the Empire in Star Wars? I hope nothing but the worst for him so maybe someone with a conscious and a soul replaces him.

I was a fan of early Elon. He had many problems but he was overall good.

Then he turned full ultra right wing nationalist who engaged in science denial. Supported a president that is unquestionably racists and unquestionably fascists. And he made this clear by doing some Nazi salutes on top of that.

Then he used that influence to sell a completely false idiotic story that cuts to discretionary spending could 'fix' the budget deficit, like a complete idiot who had never watched 2 youtube videos about the US budget. Then used to slash and burn many beneficial programs while having no impact on the deficit what so ever.

He was supposed to be science and engineering progress driven, but then allied himself with ultra-right wing anti-scientific fascists who try to dismantle the whole education system in favor of at best best creationism or more likely nothing at all.

Not sure why its hard to understand. The only people who don't understand are ultra-right wing facists who don't understand why other people don't want to support ultra-right wing facists.

Does that explanation help?