NEW YORK, June 12 (Reuters) - SpaceX traded higher in its Nasdaq debut on Friday, a day after pricing its record $75 billion IPO. Thursday's pricing gave Elon Musk's space, communications and AI firm a $1.77 trillion valuation, the largest ever in an initial offering; trading after the open on Friday pushed that figure above $2 trillion.
MARKET REACTION:
SPACEX: Shares opened at $150 late on Friday morning, 11% above Thursday's pricing at $135, and then rose to $156.
INDEXES: U.S. stocks were mixed,
with the Nasdaq down fractionally and the Dow Jones Industrial Average up 0.6%.
COMMENTS:
BEN RITCHIE, HEAD OF DEVELOPED MARKET EQUITIES AT ABERDEEN INVESTMENTS, EDINBURGH, SCOTLAND:
"The important thing to note is the relative free float of the IPO is small. The IPO has been constructed to give it the best possible chance not only of achieving a high valuation, but also of trading well initially, a relatively tight float and also a healthy allocation to retail.
"This is a dynamic that's based on the pillars of confidence, and achieving a high valuation and a successful first day market response is important in driving that confidence. And because we're at the heavy investing stage of this build-out cycle, and it needs to attract capital. Having those positive share price responses, but also high valuations, are critical ultimately to being able to fund that."
DON CALCAGNI, CHIEF INVESTMENT OFFICER, MERCER ADVISORS, DENVER:
“First day IPOS are generally pretty volatile. … The first day's performance doesn't necessarily predict how the stock will perform in the medium-term. Volatility starts to come down as time goes on, but that volatility can easily persist for a full quarter.
“The volatility is always highest fresh out of the gate because you have all that pent up demand and investors just trying to figure it out. That’s why people get excited, they see this huge pop and want a piece of it. If they buy it today, they might not be getting that huge pop themselves, but they are funding the exponential returns of all the early investors.”
SCOTT CHRONERT, U.S. EQUITY STRATEGIST AT CITI, NOVATO, CALIFORNIA:
“The key from here is investor demand and the amount of available capital/portfolio space for new opportunities.
“An important starting point is the lack of IPOs for much of this cycle. This has been a function of staying private longer given large pools of available private capital and low rates. Before that, there has been a general decline in available public companies, a trend established pre-pandemic. Lastly, consider years of de-equitization with buybacks/takeouts outstripping issuance.
“While those storylines set up well for equity demand, they must be balanced with headwinds. As mega IPOs come to market, the de-equitization story will reverse as the cashflow funding narrative continues to weaken. Combined, this puts more pressure on fundamentals to deliver, especially for AI monetization, as it helps future funding, which filter into broader fundamentals."
SHIVARAM RAJGOPAL, PROFESSOR OF ACCOUNTING AND AUDITING AND CHAIR OF THE ACCOUNTING DIVISION, COLUMBIA BUSINESS SCHOOL. NEW YORK:
"2026 will go down as the year of the mega IPO. This might even suggest the peak of the bubble fueled by low interest rates since the financial crisis, private credit boom and the unreal expectations from AI companies."
SENATOR ELIZABETH WARREN OF MASSACHUSETTS, THE RANKING DEMOCRAT ON THE SENATE BANKING COMMITTEE:
“Trump’s SEC greenlit an IPO with numbers analysts have called ‘nonsensical.’ The world will get its first trillionaire while Americans across the country are scraping together every dollar to save for retirement. Rather than changing the rules to rush SpaceX into Americans’ retirement portfolios, index providers should ensure they do their part to protect American families’ investments. And the SEC should do its job and ensure Elon Musk does not rip off investors.”
(Reporting by P. Avinash, Laura Matthews, Pete Schroeder, Suzanne McGee, Saeed Azhar; editing by Colin Barr)
