Reports that SpaceX (SPCX) attracted a fourfold oversubscription compared to the shares available are bullish. Unfortunately, that report, based on people familiar with the initial public offering, is creating a risk asymmetry for stock markets.
Nasdaq (QQQ) fell by more than 2.2% on Tuesday but managed to recover some of the losses by market close. Escalating tensions between the U.S. and Iran are to blame for the drop. However, that risk is only secondary.
SpaceX reportedly attracted more than $250 billion in investor demand. The firm is seeking only $75 billion. The disparity, created by excess demand, suggests that SpaceX might want to issue more shares to raise more from capital markets.
Buyers need to raise cash to pay for SPCX stock. They potentially sold off shares of Alphabet (GOOG). More especially, they sold Oracle (ORCL) and Microsoft (MSFT) shares. The share price in those firms dropped by even more. Palantir (PLTR) shares erased their recent spike to over $160, closing at $132.07.
The crowded trade on SpaceX stock should create a strong share price spike at the open. Speculators who were allocated shares might sell immediately to realize maximum gains before everyone else.
If everyone who received the IPO stock sells quickly, SpaceX’s opening spike might fade quickly. This happened before with other firms that went public. Rivian (RIVN) shares peaked at over $120 in 2022. It last traded at $15.73.
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