The madness of SpaceX
Posted on August 3 2026Do you remember all the hype about the SpaceX share offering and how maybe 100,000 people in the UK struggled to buy shares on launch day?
I suspect they are regretting their enthusiasm now.
Y’know how Spud is adamant that stock markets are just trading in second hand pieces of paper? How they never do raise new money for anything?
SpaceX raised $87.5 billion – with a b – at its IPO. New capital raised on a stock market. Bad thing apparently.
Yep. It’s been a whole 52 days since IPO and it’s all over. The sage has spoken, they might as well just pack up.
If only the poor fools had been able to buy SpudBonds, earning a steady 0.4% a year…
Those who bought on IPO day and sold a few days later aren’t regretting it. The people who bought their shares are the ones with regrets.
Does he really not understand that for every seller there is a willing buyer, and that it’s all – at best, and insider trading notwithstanding – educated guesswork?
Ah, but our host tells us that markets are entirely rational and use all available information to come to a rational valuation of the stock. Not just buy the next shiny thing that the internet tells them it will own the universe by next Tuesday. Or because they think its fun, and buy some stock for sh*ts and giggles (which is exactly what the whole memestock thing was about).
Economics is increasingly irrelevant in the modern world and its high time we stopped listing to economists any more than we should listen to sociologists. Economics doesn’t seem to have realised that the internet is destroying what has been considered rational behaviour. Its no longer the case that benefit (of some kind) to the individual must flow from the action they take, or even at many stages separate from (but directly linked to) their actions, its now the case that the action can be totally unrelated to the benefit, because of the ability to broadcast the action to billions of people and gain social benefit (and maybe financial benefit too) from that source. Bashing random people over the head and filming it to put on social media is not rational in the traditional sense, because no theft occurs, no personal animosity to the victim is satiated, but its entirely rational from the view of trying to get online clicks and likes. So classical economics can no longer predict what rational people will do, because it can never predict what benefit doing some random thing might create on some far fetched corner of the internet.
“markets are entirely rational and use all available information to come to a rational valuation of the stock”: said nobody, ever.
OK, if they are not rational, and don’t use all available information, what use are they?
I believe that what he says is that at any given moment the markets incorporate what information is known with such rapidity that in the absence of secret insider information you can’t beat the market knowing just what everyone else knows. Certainly it i true that money managers seldom beat the market over long periods of time, though some may have good years.
“I believe that what he says is that at any given moment the markets incorporate what information is known with such rapidity that in the absence of secret insider information you can’t beat the market knowing just what everyone else knows. “
Well thats my point. Market DONT incorporate known information into prices. See the memory stock situation in Korea. The information available about the cyclical nature of memory production, pricing and profits is universally well known. Yet the market ignored all that known information and bid the stocks to the moon. Then when the supply of idiots to keep buying at ever higher and higher prices ran out, they crashed. How is all that compatible with ‘incorporating what information is known’ into prices? If a sudden realisation of the cyclical nature of memory pricing precipitated the crash, why didn’t that knowledge prevent the moonshot in prices that preceded?
Because those stocks were bought by people who thought they could get rich quickly and easily on them, including those who know about the memory market, who did.
There’s not much that can be done about asymmetric information in a transaction, and people who make irrational decisions which in sum they perceive to be in their interest, no matter how chimeric. Look at any rough sleeper and winder how they became so.
I doubt there would have been much asymmetry about the information. It’s more, asymmetry of the interpretation of the information.
Yet the market ignored all that known information and bid the stocks to the moon.
A market trader would tell you that the price movement shows very few shares were sold/bought. So nothing much happened.
I do agree with a lot of what you say. But that’s the “backroom boyz” investment analysts placing the orders. What do you expect?
Actually the trading volumes suggest much more trading activity in the upswing phase than in the downswing. From Feb to May this year volumes in the Kospi were significantly higher (2-4 times higher) than the pre blowoff period. Its the downswing thats been done in low trading volumes, back to pre February volumes.
https://uk.investing.com/indices/kospi
To my untrained eye it looks like the pros selling their stock to retail investors, who were piling in using borrowed money and 2,3,4 times leverage, and then just marking the stock way down as some domestic buyers tried to bale out. It doesn’t look like the pros are buying back all the stock they sold, just constantly marking the price down on low volumes.
That is not actually correct.
The newspaper reports tend to include “index trackers” that are *guaranteed* to underperform the index because they have administration expenses and also have buying and selling costs every time a stock is removed from or added to the index (the index does not recognise dealing costs when it adds or removes a stock).
Some years ago I took the trouble to read a FCA report which tried to be a “hatchet job” on active managers in order to justify their policy of looking only at costs and not at performance of fund managers. It revealed that active managers – on a money-weighted basis – outperformed the index despite the inclusion, in that category for the purpose of the analysis, of “closet trackers” that charged active management level of fees while sticking sufficiently close to the index to avoid embarrassing the companies that offered them as “equity funds”. The genuine active funds significantly outperformed.
You don’t have to believe me when I say that in a good year my share of the funds we managed beat the index by a £million but there are historic records that show that the Unit Trust my employers offered for its equity-linked policies significantly and continually outperformed the sector during the period that my friend Bob was managing 10% that the Chief Investment Manager decided could be invested in the US market without significant risk to the policyholders.
I knew which guys were good managers and they did beat the market over *long periods of time* although they could have bad years.
My wife has invested in Scottish Mortgage and Law Debenture – look at their long-term performance figures.
Better than all the other solutions (paraphrasing Churchill).
I can’t speak for him, but I don’t think that is what he says.
“all available information” does not equate to “all information regarding a certain stock” …..
But really… Afaik, *every* major IPO in the past two decads got Hype valuations, hype prices, then settled lower, sometimes *far* lower, and then just did the things stocks do….
But the Solanus gets to rant against Musk…. Must be Monday….
You’d think a Quaker/Christian/socialist would be happy with this.
SpaceX is improving the world and the investors are losing money doing it. It’s like an international development charity (but one that works).
I’m not exactly sure what happens with satellite internet. It works for where there are isolated users, but at the point where lots of people in a small town in Malawi want internet, it’s worth a company like Airtel Africa installing a cell tower, which is cheaper and more reliable. So it’s never going to be that big. It’s going to be some bloke living in a shack in the mountains of Malawi, like here it’s about some bloke living in the Brecon Beacons.
(I’m looking at the IPO of Airtel Africa’s payment company. Unsexy but I reckon there might be good money in it).
It’s getting to the point where home starlink is ballpark price-compatible with fibre and possibly freer of government interference.
Including Starlink’s losses?
Starlink is heavily bandwidth constrained over “rural” USA so people with little other option pay a lot of money for it. That income funds more satellites to meet the bandwidth demand, but when those same satellites are over Europe and other parts of the world there is bandwidth to spare so the price is put down to about 50% above what people are more accustomed to paying. The price point aim is to maximize income from the excess bandwidth that is inherently available.
The downside of Starlink is that it suppresses demand for fiber connectivity which would bring real competition.
All of which becomes increasingly appealing. If you want to escape the Great Firewall of the UK, look upwards.
When I looked at Starlink a couple of months ago they wanted about £1k p.a. which was too rich for my liking.
Mine too. I’m in no rush but will definitely consider when the time comes.
But what about when eight thousand small towns in Malawi want internet? Is it cheaper than eight thousand cell towers?
Numbers have no bearing. If Starlink is cheaper for 8000 towns, it’s cheaper for one town. It wouldn’t be worth doing that one investment.
And satellite internet is unreliable technology. It’s more affected by atmospheric problems, you need line of sight. If you have shitty cell or fibre, then it’s a good idea, but I wouldn’t have it.
Oh?
Yes…. Because you can bet on those cell towers being stripped off everything within a week…
I am less than 20 miles from Birmingham, but it might as well be the Brecon Beacons. Open reach can offer me 20 mb download through their fibre and copper …well aluminium actually…it is more brittle so it breaks more….the lat time it broke it took 9 days to restore
Starlink gives me 96 mb download for £25 a month
The problem with aluminium cable is the bandwidth is a lot narrower than copper, around 70% IIRC. This was fine for voice because most people didn’t notice the clipped high end but makes data transmission very difficult.
It’s why Milton Keynes became the test bed for all radio based internet technologies, the town was cabled with aluminium when it was built.
20 Mb down?!!! Ye gods… do they also give a free 28k8 modem with that?!!
You’ve certainly got me thinking. I just checked. 100mbs 35€/m 175€ up front installation costs. It’s actually cheaper than my fiber plan. Depends on the contention ratio. Even with a backbone ISP I get dropouts. Problem is the cabling into the town, I’m told. It’s shared. There isn’t the bandwidth to cope with our population doubling in the season.
I’ve been out of the industry for over 10 years but I don’t believe the numbers will have changed much ….
The problem in rural areas isn’t the cost of the tower providing the last mile it’s the cost of backhaul which usually requires multiple towers in the middle of nowhere. The distance between those towers is inversely proportional to the bandwidth you need so providing high speed internet to rural Malawi very quickly gets eye watering expensive. It’s even one of the problems providing rural coverage in UK.
Satellite internet is going to remove government control. Anyone care to price that?
It doesn’t need to be the Brecon Beacons, I know someone in my Chilterns village uses Starlink because his POTS line is crap (another of his neighbours uses 5G, but he can’t get a decent signal). They’re rolling out FTTH, but it hasn’t reached me yet :(.
Do you remember how much blerting there was about musk being the first trillionaire and he must be taxed to the max. He’s not now, does he get a refund?
He never was. That trillionaire status was only realizable if the shares he held could all be sold at the same price as the 4% or so that were released for the IPO.
Struggled? Y’all don’t have internet?
Regret is the gambler’s curse.
SPCX is now trading near it’s initial offering price.
I think I might start buying / selling things based on potato blog posts. Last week “oil new heights above $100 barrel” since down 25%. “Sandisk crashes 50%” next day it shot up 30%
So load up on spacex is today’s spud trade
Did a quick search and the analyst average for 12 months time is $236, up about 110%. The lowest is $62 and highest is $800,which looks way out there but would make Spud go purple so we can only hope.
I can see it doing really well over the longer term, depending on how things play out. I haven’t bought in so far. Have a lot of tech stuff already and the risks are similar.
This is not investment advice. I am regulated by the voices in my head etc.
Spud put this forecast up on 9th May
“Andy Burnham has no chance of getting to Parliament in a by-election now. Manchester has turned against Labour.”
Andeh was 2/1 at the time to be next PM.
But a word of caution, Spud’s unlucky forecasting streak will end eventually.
It’s astonishing how little curiousity the self-identified economist has about the economy. His interest in SpaceX ends with “capitalism bad and African Man bad”.
Here’s a more informative take from Axios:
Zoom out: A supply and demand situation is playing out here. SpaceX made a very small percentage of its stock available to investors when it went public, less than 5%. That means there was high demand for only a wee bit of stock. And even then, the pop faded.
Where it stands: Now, more supply is on tap. On Thursday, two days after the earnings report, SpaceX employees and some early investors will be able to sell 911.5 million shares — 12% of the total, and more than the 640 million currently on the market.
Follow the money: A lot of those folks need to sell, says venture capitalist Paul Kedrosky. They’ve pledged their stock to buy homes, “private islands, cars, whatever,” he says.
That puts downward pressure on the price.
In anticipation of this, short sellers are piling in — betting the share price will go down, Bloomberg reported Friday
What they’re saying: “When lockups expire, that does put downward pressure on stock prices,” says Jay Ritter, the University of Florida economist known as Mr. IPO.
And the SpaceX unlock is unusually large because of the initial tiny float. “It’s quite possible there will be a little bit of a further dip in the share prices.”
Yes, but: Not all the unlocked shares will wind up on the market, he says.
And, perhaps counterintuitively, all those short sellers will be effectively supporting the share price when the lockups do expire later this week.
Eventually they do have to buy back stock to cover their positions, and some of them might do so in the wake of the unlock.
Sounds like the share price volatility tells us less about SpaceX than it does about current market sentiment, also volatile.
Doesn’t look good for the AI IPOs, does it? SpaceX is a real business with a proven order book of paying demand for its services. What SpaceX does can’t be easily replicated elsewhere. If it’s overvalued, what about the purported valuations of Anthropic and OpenAI, which are cash incinerators whose products are easily copied in a competitive software market yet have so far failed to live up to the hype?
Short term traders frequently see their arses, even with blue chips like Apple and Coca Cola.
I’ve got a feeling, might well be wrong, but a feeling, buying SpaceX at the dip might be a good idea.
I have no idea whatsoever what the company should be valued at. However, they are literally rocket scientists with an impressive history of product development and genuine innovation in spaceflight.
What they’ve achieved, from a technical and engineering pov, is incredibly impressive. The spaceflight industry hasn’t seen anything like it since those wonderfully talented former (haha) Nazis put the first Americans on the Moon.
Starlink, while a separate business, is a world beating strategic military advantage to the United States government. By extension, SpaceX is basically CNI for the US. Can’t sustain Starlink without SpaceX. So there’s a lot of reasons to think it’ll be an enduring, profitable company. Not because Elon Musk wants to put some poor suicidal bastards on Mars (with no drugs!). Because they have revolutionised the cost of putting things in orbit.
The history of tech IPOs is an initial rally that lasts a few days and then 18 months in the doldrums*. I intend to buy some SpaceX, but expect that cheaper prices will be available in the future so am in no hurry.
* The recent exception was ARM, but that was really a re-listing as it had previously been a publicly quoted company on the LSE before Softbank bought it, realised they didn’t know what to do with it and then plonked it on the NASDAQ.