SpaceX ended its first trading day last Friday at $160.95, giving the company a market capitalization of $2.1 trillion. The listing still set a record as the largest IPO in U.S. stock market history, but the result did not fully match the expectations built up before the debut. Research firm CFRA directly assigned SPCX a “sell” rating, adding to the debate over whether Elon Musk’s “Mars story” could support the valuation that investors had priced in ahead of the listing.
That discussion changed quickly when U.S. trading opened on Monday. According to Gate U.S. equity market data, SPCX rose throughout the session and closed at $192.5, up 19.6%. The closing price was also the stock’s intraday high. SpaceX’s market capitalization climbed to $2.519 trillion, making it the world’s eighth-largest company by market value. Market enthusiasm had not faded after the close: Hyperliquid data showed SPCX trading above $214 in pre-market pricing, and the original report said the stock was highly likely to extend Monday’s rally after Tuesday’s U.S. open and overtake seventh-ranked Amazon by market capitalization.
The broader U.S. equity backdrop also improved after the United States and Iran reached a memorandum of understanding. On June 15, Donald Trump announced that an agreement with Iran had been reached and that the Strait of Hormuz would be opened. Unlike previous rounds of unilateral verbal confrontation, the agreement was also acknowledged by Iran. Iranian Deputy Foreign Minister Gharibabadi said on the same day that the text of the U.S.-Iran memorandum of understanding had been finalized and would be formally signed in Switzerland on Friday, June 19.
The agreement was then confirmed a second time by the Iranian president. U.S. Vice President Vance also said the agreement between the United States and Iran had been signed electronically over the weekend, indicating that the terms had already taken effect and reducing the chance that either side would tear up the deal. After the news spread, U.S. equities rose broadly: the Dow Jones Industrial Average closed up 0.92%, the S&P 500 rose 1.65%, and the Nasdaq gained 3.07%. Morgan Stanley said a long-term U.S.-Iran agreement and lower oil prices would ease inflation pressure, while the U.S. stock market was shifting from a “one-stock market” toward a healthier broad-based rally. In its view, upside momentum in U.S. equities was no longer limited to technology stocks and was gradually spreading into a wider range of cyclical sectors.
Retail demand remained one of the clearest features of the SPCX trade. According to Vanda Track, on June 16 U.S. local time, SpaceX received about $93.8 million in net retail buying in a single day. That accounted for roughly 73% of total net retail inflows into all U.S.-listed individual stocks that day. In other words, for nearly every $4 of incremental retail money entering the U.S. equity market, around $3 went into SpaceX.
With demand for SPCX so strong, SpaceX’s underwriters exercised the IPO’s over-allotment option, also known as the greenshoe mechanism. They purchased an additional 83.33 million shares, raising the total IPO share issuance to 638,888,888 shares of Class A common stock. The move increased total proceeds from the offering to $85.7 billion. The report said this scale exceeded almost every recorded over-allotment arrangement for a technology company IPO. Even so, reports indicated that most qualified retail investors in the United States received only about one share in the SpaceX IPO allocation. Under an extremely tight supply-demand structure caused by the low free float, concentrated retail buying was able to lift the stock price substantially.
Options trading is another part of the discussion. On June 16, zerohedge wrote that once SPCX options begin trading, the stock could rise to $400 because of a gamma squeeze and surpass Nvidia. A gamma squeeze is an upward spiral triggered when options market makers are forced to buy the underlying stock as it rises. SpaceX’s free float is extremely low at 4.2%, while retail buying interest is very high. Retail investors who have not yet bought SPCX shares may turn to relatively cheaper call options. If large amounts of capital pour into call contracts, market makers would need to keep buying SPCX spot shares to hedge their risk, pushing the share price higher and creating a positive feedback loop. The 2021 surge in GameStop, or GME, is one of the classic examples of this effect.
Institutional commentary also moved in a more constructive direction. Before the U.S. market opened on June 15, Oppenheimer analyst Timothy Horan initiated coverage of SpaceX with an “outperform” rating and set a short-term price target of $190. After the Monday session, SPCX closed at $192.5, broadly in line with Oppenheimer’s target.
Prominent entrepreneur, XPRIZE founder and early SpaceX investor Peter H. Diamandis published a post on June 14 describing SpaceX as a “railroad in orbit.” He said the company would open the way for a multi-planetary human civilization and create enormous wealth in the same way that 19th-century railroads opened the American West. He also predicted that SpaceX and Tesla would merge within the next year and become the first $100 trillion company. Diamandis said that over the past decade, whenever he freed up capital from other trades, he invested that money in Bitcoin; now, whenever he has idle capital, he invests in SpaceX. Although he expects the share price to fall when locked-up shareholders are able to sell shares and some investors cash out, he said his SpaceX investment is not about chasing quarterly stock gains, but about helping build an off-Earth economy. On June 16, well-known Silicon Valley investor Brad Gerstner described SpaceX on the latest episode of the BG2 podcast as an asset that institutional investors must buy and hold, arguing that the company sits at the intersection of two major themes: the space economy and the expansion of artificial intelligence computing power.