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SpaceX IPO Frenzy Builds as Analysts Warn of Volatility

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SpaceX IPO Frenzy Builds as Analysts Warn of Volatility

Retail and institutional enthusiasm is building as SpaceX moves closer to its historic debut on Wall Street, but analysts cautioned that the sheer scale of the listing could fuel volatility.

Elon Musk's rocket and satellite company plans to offer about 555.6 million shares at $135 apiece, for a record $75 billion that would eclipse oil giant Saudi Aramco's blockbuster IPO in 2019.

SpaceX's IPO has drawn over $70 billion in orders from retail investors, Bloomberg News reported Thursday. Previously, Bloomberg said institutional demand for SpaceX shares was more than four times the amount available.

SpaceX may be targeting a market value of under $1.8 trillion, placing it among the 10 most valuable public companies in the US.

But just as SpaceX prepares to begin trading on the Nasdaq Friday, some on Wall Street have pointed to increased volatility.

"The SpaceX anticipation has caused some added volatility in the market especially in the tech sector as traders/investors anticipate the ripple impact of this historical IPO," Wedbush Securities analyst Dan Ives said in a note on Wednesday. "While there will be some worries that the mammoth SpaceX will take away some oxygen from the tech/semi trade as investors rotate into SpaceX, we believe this will be a short-term bump in the road as the market adjusts to this new tech titan as a public company."

Oppenheimer also expects high price volatility for SpaceX shares due to an initial demand and supply imbalance amid strong retail demand.

But there are other risks too.

"We note significant regulatory, technology, execution, keyman and investor expectation risks remain and that thermal management of chips for space applications in space within four years appears challenging," Oppenheimer said. "However, its space infrastructure appears structurally advantaged."

Markets are also tracking other mega-cap IPOs of OpenAI and Anthropic.

"While strong investor sentiment is likely to support upcoming mega IPOs, their scale and current unprofitability introduce risks of short-term volatility," Wells Fargo Investment Institute said in a note on Wednesday.

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