At around 100 times sales, SpaceX’s initial public offering at a $1.75 trillion valuation will be pricey. Valuations will not matter. Speculators may find many expensive stocks, like Carvana (CVNA), Avis Budget (CAR), or Tesla (TSLA). Shares in those firms spiked or continued to hold their premium.
On the day of the IPO, the shortage in shares will most likely create a price spike in SpaceX stock. Conversely, the stock could fall sharply minutes after the opening. Its opening day trading action will depend on traders.
Profit-takers might flip their stock, selling at market price to lock in profits. That would hurt the stock price. Alternatively, investors who bought companies holding SpaceX stock might sell them. Alphabet (GOOG), for example, owns a 5%-6% stake in SpaceX. That would send GOOG stock down slightly, while SpaceX trades higher.
Ownership Structure
Even though Google had a dual-class voting power structure when it IPO’d, that did not hurt GOOG stock. CEO Elon Musk will have a dual-class share structure that gives him a solid 85.1% voting power.
Strong demand for SpaceX stock is an investment in Elon Musk. He continues to attract investor money. That does not concern the underwriters. Goldman Sachs, BofA Securities, Citigroup, JPMorgan Chase, and Morgan Stanley are the syndicate members who are underwriting this IPO.
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