The stock market debut of SpaceX, which investors around the world watched with bated breath, was far longer and hotter than expected. On the 12th, when SpaceX, which held the largest initial public offering (IPO) ever, listed on the Nasdaq, buy orders poured in, delaying the first transaction for hours after the market opened, and Korean investors also stayed up through the night to watch the trading.
SpaceX's offering price was $135 per share (about 205,000 won), but on the listing day the first transaction started at $150 (the opening price). Early in the session it topped $160, signaling a new era for the space industry.
With SpaceX finally listed, investors' focus is shifting beyond the simple direction of the share price to "how to put SpaceX in my portfolio." Many Korean retail investors trading U.S. stocks jumped in to trade shares overnight, but there is also strong demand to trade exchange-traded funds (ETFs) that hold SpaceX to diversify.
In particular, experts advise that, given the controversy over overvaluation during the IPO that drew in the most capital in history and the frequent cases of share prices falling for a time after corporations enter the market, it is desirable to pursue indirect, diversified investment through ETFs.
◇ Korean retail investors trading U.S. stocks wait all night for SpaceX's first transaction
On its first day on the Nasdaq, trading in SpaceX shares did not begin until about 12:45 a.m., well past 9 p.m. our time when the U.S. market opened. That means it took a long time to find the right price.
In the U.S. stock market, to prevent overheating on the first day of listing, trading begins only after buy and sell prices reach some balance. If it is difficult to establish an opening price, trading can be delayed well after the start of regular hours. Facebook (now Meta), Snowflake and Arm also saw their first transactions take place after noon U.S. time.
As investor interest intensified, there was even a mishap in which an alert was sent in error by foreign media. Reuters sent an alert about two hours after the U.S. market opened saying SpaceX shares had started trading at $172. But it immediately withdrew the alert and corrected it to say, "SpaceX shares have not started trading yet."
Right after SpaceX transactions began, the share price jumped more than 20% to top $165.
◇ "If you are conservative, buy after confirming second-quarter results"
Experts expect SpaceX's share price to swing widely in the early days of listing. It is drawing intense interest from global investors, but there has been controversy over overvaluation even before listing. Based on last year's revenue, SpaceX's price-to-sales ratio (P/S) is about 95 times. The higher the P/S, which is the market capitalization divided by annual revenue, the more the share price is interpreted as excessively reflecting expectations for future growth.
Park Ki-hyeon, an analyst at Kiwoom Securities, said, "A considerable portion of the current market cap reflects expectations for businesses whose results have not yet been proven, such as the next-generation launch vehicle 'Starship,' Mars exploration, and an orbital data center," and noted, "SpaceX is the first large artificial intelligence (AI) corporations to list while in the red."
In addition, lockups on massive amounts of shares will be lifted over the year after listing. On the listing day, SpaceX's free float ratio was around 4.2% to 4.9%, but lockups on the equity of employees and retail investors (right after the second-quarter earnings release), executives and key investors (right after the fourth-quarter earnings release), and Elon Musk (one year after listing) will be lifted sequentially. As the free float increases due to lockup expirations, if inclusion in major indexes follows, share price volatility could rise.
Because of this, some analysis says that expected returns may not be high if investing early after listing. Analyst Park Ki-hyeon said, "The first few trading days after listing are a base-price formation period to assess fair value, so structurally high volatility is inevitable," and added, "For conservative investors, it would be advantageous in terms of risk-reward to enter after confirming the price discovery process around the second-quarter earnings release, when the initial lockup-expiration shock is reflected and results can be confirmed."
◇ Don't want FOMO but worried about volatility… putting SpaceX in via ETFs
That said, you can't indefinitely postpone investing in SpaceX, which is expected to make the most dazzling market entrance in history and draw in massive global funds. The "FOMO" to endure when the share price surges is likely to be considerable. For these investors, the recommended approach is an indirect, diversified strategy through ETFs.
First, by investing in ETFs that buy into "newcomer" stocks that have just entered the U.S. market, you can add SpaceX to your portfolio. Representative examples are the First Trust U.S. Equity Opportunities ETF (FPX) and the Renaissance IPO ETF (IPO).
Space-themed ETFs listed at home and abroad are also expected to add SpaceX sequentially. ETFs listed in the United States include ARK Space & Defense Innovation ETF (ARKX), Procure Space ETF (UFO), and Tema Space Innovators ETF (NASA).
In the case of the UFO ETF, which has been managed since 2019, SpaceX is slated for early inclusion next week following revisions to the underlying index rules. The NASA ETF directly holds about 6.4% equity in SpaceX through a special purpose vehicle (SPV).
Starting on the 15th, the next trading day after SpaceX's listing, single-stock leveraged and inverse ETFs that track SpaceX's share price at 2x will also list on the U.S. market.
Domestic asset managers are also moving quickly. While the actual inclusion size will vary with market conditions, each manager said it plans to add SpaceX promptly given the strong investor interest.
TIGER U.S. Space Tech ETF, listed by Mirae Asset Global Investments in Apr., concentrates on 10 pure space corporations excluding defense companies. Through ad hoc rebalancing, it plans to add SpaceX next week.
Samsung Asset Management's KODEX U.S. Aerospace ETF can also make a special inclusion of up to 25% when a high-quality space company lists. Hana Asset Management's 1Q U.S. Aerospace Tech and Timefolio Asset Management's TIME Global Space Tech & Defense Active ETF are also products that can invest indirectly in SpaceX.