SpaceX “flippers” who sold shares immediately after the company’s massive IPO are kicking themselves after the stock’s meteoric 50% rise – though early options trading shows many are doubtful the frenzy can last.
The stock had gained nearly 50% in its first three days of trading as of Tuesday’s close, making Elon Musk the world’s first trillionaire and briefly shooting SpaceX’s valuation past those of Amazon and Microsoft.
“We all feel like idiots for not trying to buy it at $135,” Allen Tran, founder of investing community HaiKhu Trading, told the Wall Street Journal – after the 28-year-old bought and sold his SpaceX shares on Friday for a five-figure return after they first debuted on the Nasdaq.
Tran estimated he lost out on $60,000 in gains – and he’s just one of many so-called “flippers” who are feeling seller’s remorse after SpaceX’s unprecedented climb to as much as $218 a share, after opening at $150.
SpaceX shares fell 3.5% Wednesday, the stock’s first slip since opening, as some investors sounded alarms over the rocket firm’s jaw-dropping valuation.
That put SpaceX as the still-formidable sixth slot of most valuable publicly traded companies in the world.
During the first day of SpaceX options trading Tuesday, pricing implied a 15% chance the stock rises another 50% by September – but it also showed a 13% chance it falls by the same amount, according to Chris Murphy, strategist at Susquehanna Financial Group.
“The largest trades increasingly looked like hedges tied to future supply risk,” Murphy wrote in a note. “Upside calls reflect demand for another sharp move higher, while downside puts reflect concern around lock-up supply, valuation risk, and the possibility that the initial post-listing enthusiasm fades.”
“The result is a difficult trading setup. The tails look too expensive to buy, but they also look too dangerous to sell,” he added.
About 1.8 million SpaceX options contracts changed hands Tuesday, according to Cboe Global Markets data – shooting past the first-day record that Meta set in 2012.
SpaceX bulls have argued that the stock is trading based on sentiment around its many segments – including space travel, artificial intelligence, satellites and tech in general — and that its revenues could eventually catch up with its out-of-this world valuation.
But wary investors online pointed out that both Amazon and Microsoft boast drastically higher profits than Musk’s firm – with Amazon hitting $77.7 billion last year and Microsoft bringing in $101.8 billion, while SpaceX lost $5 billion.
Investors have been concerned that SpaceX’s massive AI spending is weighing on profits – with the company on Tuesday announcing a $60 billion acquisition of AI coding startup Cursor.
Meanwhile, in group chats, traders are debating whether it’s too late to jump in on the SpaceX trade, Tran told the Journal.
“I would much rather have done nothing and made more,” he said, lamenting his stock sale. “I don’t think anyone expected SpaceX to rally like this.”
Before SpaceX started trading, investors could request shares through brokerages including Fidelity and Robinhood, which typically try to discourage quickly selling off IPOs.
Fidelity warns investors that selling IPO shares within the stock’s first 15 days of trading will block them from participating in new debuts.
Aaron Cook got one share through his brokerage account before SpaceX’s debut, and bought another 11 afterward – selling about half of the total shares on Friday and Monday.
“It was just me cutting my risk,” the 29-year-old told the Journal. “Who expects 20% [gains] three days in a row?”
Forde Todd, a 20-year-old college student in Philadelphia who sold some shares Tuesday morning, called the stock’s climb “unbelievable” – adding: “I am a little cautious … You’re paying a Musk premium, pretty much.”
Devin Powell, a 48-year-old Arlington, Texas, resident and loyal Musk follower, took the opposite stance, saying of the tech titan: “He’s almost at the point where he’s too big to fail in some ways.”