You Already Own SpaceX

You probably watched the SpaceX IPO from the cheap seats. Cool rocket, wild numbers, not your circus. Fair enough.

Except there is a decent chance it landed in your retirement account this month, and nobody called to ask.

Here is how that happened. If you hold a plain total-market index fund, the kind that sits quietly in a lot of 401(k)s, or a Nasdaq-100 fund, your fund is buying SpaceX for you right now. The index companies rewrote rules that stood for twenty years and waved it in, even though SpaceX floats almost none of itself and has never turned an annual profit. It lost about $5 billion last year. Old rules would have kept it out. The rules changed a few weeks before the biggest IPO in history. Make of that what you will.

Now the part that should keep you calm. If your main fund is an S&P 500 fund, you are clear. The S&P held the line and kept its old profitability rule, so no SpaceX there until at least 2027. And even in the funds that are buying it, the slice is tiny, a fraction of a percent. So this is a know-what-you-own thing, not a sell-everything thing. Pull up your statement sometime this month and just see what is in there.

So that is the funny part. The people who never thought about SpaceX got a little anyway. Meanwhile the people who actually tried to buy it mostly came up empty.

The line nobody could get into

SpaceX started trading June 12 under the ticker SPCX. Fixed price of $135, raised about $75 billion, biggest IPO ever by a mile.

The company even tried to be generous to regular investors. A normal IPO hands them 5 to 10 percent of the shares. This one aimed for 30. Did not matter. So many people wanted in that the slice got chopped into confetti. One guy asked for 2,500 shares and got 147. Another asked for 75 and got 11. People posted screenshots of the single lonely share they ended up with.

Then it ran. Up 19 percent the first day, past $200 the next week, back to around $185 now. Buy at $135 and you are happy. Buy at $200 in the rush and you are underwater. Same stock, same month.

Why the price keeps lurching

One word explains the whole circus. Float.

Float is the share of a company that actually trades. SpaceX floated about 5 percent of itself. The rest is locked up with Musk and early insiders who cannot sell yet. So you have a mob of buyers fighting over a teaspoon of shares. Tiny supply, huge demand, prices that swing. That is a shortage, not a verdict on the business.

And the shortage runs out. Insiders start selling in waves, the first around the company’s first earnings report this summer, a bigger one near December. More sellers usually means more pressure on the price. That does not tell you where it goes. It just means the boring plumbing matters more than the headlines.

The quiet part

SpaceX is worth around $2.4 trillion. It also loses billions a year and has never shown public investors an earnings report. The first one comes this summer.

There is real stuff in there. Starlink has passed 10 million subscribers and makes money. The rockets have no rival. But a $2.4 trillion price on a company with no profits yet is a bet on the future, not the present. Wall Street knows it. Their price targets run from the low $60s to north of $400. When the pros are that far apart, nobody actually knows.

The point

I am not telling you to buy it or skip it. Anyone who tells you which way this goes is guessing with a straight face.

The lesson is about you.

That itch you felt watching it climb, the need to get in before it ran off without you, has a name. FOMO. It is the most expensive feeling in investing. It buys at the top and sells at the bottom. I wrote a while back about how panic selling wrecks more retirements than any crash does. The FOMO buy is the same mistake in a better mood.

The people who did best here were not the ones who wanted it most. They were the ones who got a calm allocation at the offer price, or who shrugged and stuck to a plan that does not hang on one lucky ticket. The ones who chased it at $200 are the ones down money.

No single company has to be in your portfolio for the plan to work. That is the whole point of a plan. You never have to be right about one stock, including the loudest one on the planet. And if you own a broad fund, you probably own a sliver of this one already, sized so small it cannot make or break you. That is diversification doing its job. Owning a slice through your fund and betting a chunk of your savings on the stock itself are two very different things. Know which one you are doing.

If a brand new, no-profit, headline stock is the thing standing between you and your goals, the company was never the problem. The plan was. And a plan you can fix, which is more than I can say for the price of SpaceX next Tuesday.

Happy to talk through where something like this fits, if at all, before the next loud thing shows up. There is always a next loud thing.

Author · Jeremy M. Ziemer, MBA

Founder, Million Pebbles · Registered Investment Advisor in Colorado

Jeremy founded Million Pebbles in 2012 because financial advice had gotten more complicated — and expensive — than it needed to be. MBA. Registered Investment Advisor in Colorado. Will happily talk about estate and legacy planning, stocks, card collecting, or what families from Highlands Ranch to Flying Horse actually worry about when they call us at 9 a.m. on a Tuesday.

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Educational only — not investment, tax, legal, or financial advice. Past performance doesn’t predict future results. Talk to a qualified professional before making any financial decisions.