Episode summary
How to Trade the SpaceX IPO
Summary
The host focuses on how to trade SpaceX as it begins trading under ticker SPCX at $135 a share, but he frames the setup as one case inside a broader IPO playbook. He says investors are also facing a busier market backdrop, with Iran tensions, a flood of new stock supply, and a $7 Supermicro offering, which he argues could add volatility across the tape.
His main point is that IPOs usually reward patience more than chasing the first pop. Citing research from The Lifecycle Trade and Investors Business Daily, he says roughly 90% of IPOs eventually trade below their first-day low. He argues the better approach is to wait for an IPO base to form, typically over two to five weeks, though sometimes in as little as seven days, as the stock stabilizes and the market begins valuing it away from the hype.
The host says the best breakouts usually happen when the stock emerges from that base on heavy volume, often in a cup-and-handle pattern. He warns that pullbacks can be around 20% and, in volatile periods, as much as 50%, so traders should expect a bumpy path before any sustained move higher.
Key takeaways
- The host says roughly 90% of IPOs eventually trade below their first-day low, making the opening pop a poor place to chase entries.
- He argues the better setup is to wait for an IPO base, which usually takes two to five weeks but can form in as little as seven days.
- The host says the strongest IPO breakouts typically show a major single-day price surge and heavy volume.
- He warns that in volatile markets an IPO can pull back 20% or even 50% before stabilizing.
- For SpaceX, the host says he does not know whether investors should buy, but history favors waiting for the market to prove the stock first.
Notable quotes
“Number one, 90% of IPOs eventually trade below their first day low”
“the history shows it is best to wait a few days or weeks for the IPO base to take shape on any new issue, really, regardless whether it is soaring or crumbling”
“when it starts to break out of the base, that is the peak buying opportunity because that forces the stock to prove itself first”
“the most successful IPO base breakouts have two key traits. Major single-day price surge and heavy volume”
“even if a stock eventually recovers, that process can take a long time”
How the episode opens
Morning. This is Don Jovaneau behind the market. Happy Thursday.
Today is Thursday, June 11th. I know this is not the SpaceX channel, but I will talk about it today because it is the day before SpaceX goes public tomorrow, symbol SP CX, Sam Paul Charlie X-ray. Coming out at $135 a share.
That is what it looks like. The order book is being closed tonight. Once I have this video, I will get back to a more normal course of business because we have to get back to a more normal course of business, more balanced, because there are other things that are actually happening that need our attention, specifically the Iran war heating up.
Of course, curiously not crashing oil prices, but that's another topic. And also, the sudden flood of stock on the market hitting the market aside from IPOs, SpaceX, OpenAI, and Anthropic, aside from them, you have a sudden flood of stock hitting the market from Mag 7 companies and other AI participants. Yesterday, Supermicro announced that they're doing a $7 offering, and that has a lot of risks.
All those things coming onto the market. So, we will talk about this. Believe me, we're going to pivot to that or I wouldn't be doing you a service.
But anyway, back to SpaceX. I know you guys are excited. Tomorrow's the big day.
So, I told you I'd share some research with you on how to best trade IPOs or what you should expect or watch out for. So, I have some stuff, and a lot of it comes from a book called The Lifecycle Trade, How to Win at Trading IPOs. You can get that yourself, and some of it comes from Mike Webster at Investors Business Daily who compiled a lot of research on this and presented this.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- spacex ipo
- ipo post-issuance performance
- ipo chart patterns
- ai-related stock offerings
- market volatility
Companies and tickers mentioned
- SPCX
- SMCI
- SpaceX
- Super Micro Computer
- OpenAI
- Anthropic
Watch the episode
Watch “How to Trade the SpaceX IPO” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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