“The first rule of compounding: never interrupt it unnecessarily.”
-Charlie Munger
Here’s what you need to know this week:
· Stocks rise for a ninth straight week
· Your questions on the SpaceX IPO, answered
Unbothered
Stocks continued their winning streak and we are now in the longest consecutive streak of weekly gains since 2023. The S&P 500 is up roughly 11% year-to-date, the tech-heavy NASDAQ is up more than 16% while the industrial-leaning Dow Jones is up about 5%. While all three indices are at all-time highs, the NASDAQ and S&P are clearly benefitting more from their heavier exposure to A.I. companies.
Last week’s gains came despite increasing uncertainty on two fronts. First was inflation: the Personal Consumption Expenditures (PCE) report for the month of April showed annualized inflation at 3.8%, indicating that the Iran War’s impact on prices continues to grow:
The second is the Iran War itself. Investors have received rapidly shifting reports on the state of negotiations from both the US and Iran, and oil prices have moved higher as a result. Negotiations are actively ongoing and markets seem primed for another leg higher if a broader ceasefire agreement is reached.
The SpaceX IPO
We’ve been fielding a lot of questions about SpaceX going public so I’ve decided to answer all of them in one place. Here’s your field guide to the SpaceX IPO:
Elon Musk’s space exploration and satellite firm SpaceX officially filed for an initial public offering (IPO) earlier this year. This means that the company will sell shares to the public for the first time, changing its status from a private company to a public one. SpaceX has already confirmed that they have secured the ticker SPCX as their stock ticker and will trade on the NASDAQ. Shares of SpaceX will be available to buy (and sell) starting next Friday, June 12th.
Elon and SpaceX’s board of directors are targeting a company valuation between $1.75 - $2 trillion and are offering 2-4% of the company to the public at first, meaning a total of ~$40-80 billion worth of shares will trade on day 1. SpaceX recorded $18.7 billion of revenue in 2025, which means SpaceX will open with a valuation of roughly 100x revenue. While this is an unusually high multiple, high-growth companies often wear higher-than-average multiples as investors expect the company to grow into its valuation.
The SpaceX corporation holds Musk’s satellite internet company Starlink and his artificial intelligence company xAIunder its corporate umbrella. In fact, Starlink’s internet sales currently make up the majority of SpaceX’s revenue. Musk also holds the bulk of super-voting shares, giving him roughly 85% of the voting power at SpaceX.
When shares begin trading, 30% of float will be allocated to retail. This means that 70% of the shares offered to the public (float) will be offered to institutions and investment funds while the remaining 30% will be available to individuals. Much of the 70% earmarked for institutions will go to index funds.
Indices like the S&P 500 and the NASDAQ have an interesting dilemma with SpaceX. The S&P 500 tracks the 500 largest public US companies while the NASDAQ tracks the top 100 non-financial companies traded on the NASDAQ exchange. Apart from size requirements, both indices typically require seasoning period for shares to trade before they consider a stock for inclusion in the index. However, because SpaceX is coming public at such a large valuation, the indices have chosen to expedite its introduction. The NASDAQ normally has a 90-day waiting period for index inclusion but has fast-tracked the period to 15 trading days for SpaceX; the S&P 500 has moved even quicker, changing its quarterly inclusion process to just 5 trading days[1].
This means that if you hold an S&P 500 or NASDAQ index fund then you will automatically hold shares of SpaceX once it is added to each respective index. The exact amount will depend on how much float is available to index fund providers at the time of trading, but by valuation weight SpaceX will take up 2.4% of the S&P 500 and 4% of the NASDAQ, meaning index funds will need to continuously buy shares as more become available on public markets over time[2].
How do more shares become available? When the current owners of the shares sell them, of course. Right now, SpaceX is owned by SpaceX employees, venture capital firms, large institutions such as hedge funds and banks, and of course Elon Musk himself. Typically, a company will have a lockup period of 180 days following an IPO where employees and other shareholders are restricted from selling their shares. This helps boost the share price after the IPO but often leads to a decline as the stock approaches the 180-day mark as investors anticipate insiders selling shares to tap their newfound wealth.
Instead of the normal 180-day lockup period, SpaceX is employing a rolling lockup strategy in an attempt to smooth the effect of employee & investor sales on its share price. Most early investors will be allowed to sell 20% of their shares on the day after SpaceX’s first quarterly earnings report. They will also be allowed to sell 7% of their shares after 70, 90, 105, 120, and 135 days after the IPO, 28% after the third earnings report, and the remainder will unlock after 180 days of trading. Certain large investors including Elon Musk himself have agreed to a total lockup of their shares for a minimum of 366 days and Musk says he has no intention of selling any shares[3].
The initial share price will not be set until the day before the IPO so I won’t speculate here. If you have any additional questions on the SpaceX IPO please feel free to reach out to me or one of my team members here at Eternal Wealth Management, and I will also email & post this summary as a standalone piece to make it easier to refer back to as the IPO approaches.
Upcoming Art Gallery
Quick reminder: our art gallery for clients and friends is quickly approaching on June 11th from 5:30-7:00 PM. The art gallery will be set up in our office building’s lobby and will feature four artists as well as complimentary food and wine. Each week we will feature one artist in the upcoming show; this week’s Featured Artist is Liessa Lieppman. Liessa’s art has hung at Paseo Gallery One, Healthy Living OKC, Art on Paseo, and is currently exhibiting at Street SmARTs Studio and Gallery. Her art showcases imaginative representational imagery with an impressionistic style in watercolor, acrylic and mixed media. Make sure to put our art gallery on your calendar! | |
What Else
· Artificial intelligence firm Anthropic confidentially filed for an IPO later this year
· A rocket built by Blue Origin, Jeff Bezos’ space exploration company, exploded on the launchpad; no one was hurt by the explosion
· The Pentagon announced a $9.7 billion contract with Dell, sending shares of the computer manufacturer soaring
· Treasury Secretary Scott Bessent proposed the creation of a new $250 bill with President Trump on the bill; current law prevents living people from being on official currency
· The New York Knicks and the San Antonio Spurs play Game 1 of the NBA Finals tonight at 7:30 PM on ABC
· The FIFA World Cup starts next Thursday, June 11th
What We’re Reading
Meteorologists are warning of a potential “super El Niño” event this summer. El Niño is a phenomenon where the surface of the Pacific Ocean is warmer than usual and influences dramatic weather patterns such as hurricanes, heat waves and droughts. Counterintuitively, “super El Niños” actually reduce the amount of hurricanes in the Atlantic Ocean by increasing upper-level winds that destroy storms as they form, but increase hurricanes in the Pacific Ocean. Click below to read more about this phenomenon and how it may impact this summer:
What’s Happening Downtown
The National Hotel is hosting Mystery Tea: An Afternoon of Accusations this weekend. This event is an interactive murder mystery where each table will be provided with the case file and clues to solve the mystery. Each table will also receive tea, scones, savory bites and sweets. The event runs from 1:00-4:00 PM both Saturday and Sunday and tickets start at $30 per person. Click below to learn more and to secure your tickets!
· Mystery Tea: An Afternoon of Accusations
To read more from our blog, click here
Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, CFP®, Brandon Ingerson, Bill Daniel, Sam Postich, Jenni Hess, Hannah Hartman
[1] Yahoo! [2] Bloomberg [3] Morningstar