Hey SatsMate Stackers,
There often is so much buzz and excitement about companies going public on the NYSE! This buzz and excitement can be a lot of fun, but this hype, not tethered to reality, can lead to excess valuations, euphoria, and people getting in for the wrong reasons. In this podcast, I go over IPOs in general, the SpaceX IPO, and my thoughts. I hope you enjoy this one as much as I did!
- I have lost a lot of money on IPOs in the past
- IPOs are exciting; there is so much buzz when these things go public
- Both natural and unnatural buzz
- Many people I haven’t heard from in years on investing reached out - yellow flag
- These roadshows really hype it all up, and get Investment Bankers, Large Investors & the public interested
- Some examples of IPOs that have done very well, and some haven’t
- The best: UBER, VISA, META, SNOW, AMZN, and more, all 100-7000% returns over time
- The Worst: FIGMA, Pets.com, Groupon, Etoys, all bankrupt or down 70-95% since IPO
- The lesson here is that so many IPOs do poorly, and some do well
- Research indicates that between 30-40% actually perform well, and 60-70% perform poorly over the long run
- I think SPACEX will be hyped for a few months, experience most of its drop in the next 12 months, and then over the long run, it may do well, as there are some impactful businesses in the portfolio
- Reasoning: the lockup period for insiders and institutional investors
- NASDAQ Situation with SpaceX
- Many indexes bent the rules to include SpaceX in the index
- 401K investors are buying SpaceX in their retirement, even if they don’t want to
- If you are target dated or if you have growth exposure, you will be shortly investing in SpaceX
- RUSSELL 1000, FTSE, Nasdaq 100, and the VTI (total market) will be buying SpaceX
- They adjusted the rules for index inclusion just days before, and I think this may, unfortunately, make your average folk become the new exit liquidity
- My view on valuation
- There are so many great companies out here, and I think, naturally, humans are greedy
- The lead underwriters, like JPM, gauge interest and are the ones setting the price. I think SpaceX is genuinely a great company, but they don’t make money
- If fundamentals matter like in the Intelligent Investor book, it would trade around $20-30 a share, maybe (and even that would be expensive)
- People are betting on a story, or a narrative to unfold
- Now, I say never bet against Elon - he goes all in on himself and his companies - and I’ve made a lot investing in Tesla
- You know what never had an IPO, Bitcoin - every coin is generated with Proof of Work, and was generated by mining
- There was no insider allocation - I buy Bitcoin because it is fairer than stocks. Those closest to the money printer, to the elite, bankers, underwriters, etc., are the ones who get ahead with IPO’s
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Best Regards,
SatsMate Stack
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Financial Disclaimer: Nothing stated in this video is a recommendation from SatsMate to buy or sell a particular security or asset class. It would help if you wisely considered your tolerance for risk, time horizon, and financial goals before investing.
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