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For the past 3 months I have been daily monitoring what some early treasure hunters considered to be the best potential (retail) pre-IPO entry vehicle for SpaceX:  DXYZ.  I had hoped that this Closed-End-Fund would drop to a discount or lower premium before June, but it has not worked out.  The fund has remained too expensive and it never reached a rational entry point.  So, I’ll walk away unless DXYZ takes a dive before the official SpaceX IPO date.

What MarketCycle did do is to buy the ETF of “UFO” (aerospace) for client accounts in the very beginning of April, well before the IPO date was announced for SpaceX.  This is a strong fund; UFO made 15% just during the three trading days of May 22- 27 (when I was writing this post).

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Stock ownership represents partial ownership in a company.  You own a piece of the action.  Stocks move higher and generate investor profits based on positive and growing earnings… but only if the stock is publicly available to be purchased, which leads us to…

SpaceX will likely go public via its IPO (Initial Public Offering) in mid-June (12th?).  Its day-one target valuation is a ridiculous $1.75-trillion and this is for a 4-part company that makes no money; all combined, this 4-part package LOSES $10.5-billion per year.

1. X (Twitter)… currently loses $24-billion per year
2. xAI (artificial intelligence)… currently loses $2.5-billion per year
3. The rocket business… earns $4-billion per year
4. Starlink satellites (the “Comcast of space”)… earns $12-billion per year

$16,000,000,000 positive earnings – $26,500,000,000 negative loss = a total loss of $10.5-billion per year (and SpaceX is being offered up to the public for approximately $1.75-trillion).  Such a deal!

Please understand that I am talking about the current earnings of the company.  SpaceX will eventually have stronger earnings and a high valuation, perhaps even bigger than Nvidia by 2029(?)… but that is not happening in the near-term as SpaceX goes punblic.  The IPO likely goes parabolic on day one and it then likely moves lower over the subsequent weeks.

The Nasdaq-100 (and likely the S&P-500), until Musk had a face-to-face meeting with them, required 3 months before an IPO could be listed on their indexes.  This is because almost all IPOs soar in price on day one and then plummet after the initial period of euphoria suddenly ends.  Usually, if an IPO hits $300 per share on its IPO date, it is often worth just $100 three months later, so the indexes have learned to wait for 3 months before listing the new stock on their indexes.  But after a private talk with Musk, they suddenly require only 15 days to list on their indexes, so SpaceX (stock symbol: SPCX) will be listed in the Nasdaq-100 (and very likely the S&P-500 and possibly other large-cap indexes) in late-June.  The indexes, the big banks, the brokerage houses and Musk are all set up to make a lot of fast money.  Musk will be the first “Trillionaire” in the history of the universe.

SpaceX will almost instantly become roughly 3% of each index.  This means that every single person that holds the Nasdaq-100 index or the S&P-500, which includes almost ALL global investors, plus all 401-k plans, will become mandatory buyers & holders of SpaceX exactly 15 days after its IPO is introduced.  Musk found a way to create a purely “manufactured” and “mandatory” and “ongoing” demand for his stock (but again, its actual price may still drop when investors realize that it is grossly overvalued in the near-term).

The icing on the cake (for Elon) is that it currently looks as if Musk will now be allowed to sell his personal shares much earlier than normal (weeks rather than months?) and he owns a lot of this new SpaceX company.  Musk will likely reap a cool $75-billion on day one.  It pays to be an Oligarch in the Kingdom of the United States where much of his personal company development was paid for by the U.S. taxpayer.  You and I built SpaceX from the ground up via our $50-BILLION taxpayer funded “Government-Grant Gifts”… and now we can “own” a tiny chunk of SpaceX if we hand over even more money.

Bottom line:  Even if you do not directly buy SpaceX (using the symbol of SPCX) you are likely to own up to a 3% chunk of it (15 days post-IPO) in your stock-index ETFs such as QQQ or SPY.

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SUMMARY:  Still bullish!  Risk is just at normal levels, we keep hitting record highs, MarketCycle’s positioning is beating the market, the overall stock market wants to go even higher, and there are a lot more opportunities out there than normally exist!

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Thanks for reading!

MarketCycle Wealth Management is in the business of navigating your investment account smoothly through turbulence. The final years of this secular/cyclical bull market bubble will likely be highly profitable.  We strive hard to earn our keep and to make our small management fee disappear into profits generated.

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