Author: Ye Zhen
Source: Wall Street News
On its second day of trading, SpaceX's stock continued its strong momentum from the debut, pushing its market value above the $2.5 trillion mark and officially placing it among the top six listed companies globally by market capitalization. This unprecedented super IPO and its exceptionally low initial free float are setting the stage for a rare game of chip distribution in the global capital markets.
SpaceX's stock closed at $192.46 on Monday, surging nearly 20%, up more than 42% from the IPO price of $135, adding $412 billion in market value in a single day.
After the underwriters fully exercised their over-allotment option (greenshoe), the total capital raised by the company reached $86.2 billion, with a net proceed of $85.7 billion after underwriting fees. This robust market performance has not only directly boosted confidence in the artificial intelligence sector that has driven market gains this year but also set the tone for the valuation reset of the entire tech giant cohort.
The frenzied market demand has made founder Elon Musk the world's first trillionaire, with his net worth now exceeding three times that of the world's second-richest person, Google co-founder Larry Page. This successful listing has significantly alleviated Wall Street's concerns about the market's capacity to absorb mega IPOs and has paved the way for potential listings later this year by large AI rivals such as Anthropic and OpenAI.
However, amid the strong start and expectations for passive buying, market observers warn of dramatically heightened volatility in the stock in the coming months. In this meticulously engineered capital feast by Wall Street, investors must pay close attention to two key time points in July. These involve not only the clash between massive passive funds and the period of minimal share supply but may also reveal the more extensive merger strategies behind Musk's business empire.
Resonance of Retail Frenzy and Macro Environment
During the first two trading days of the listing, retail investors exhibited an extremely high level of buying enthusiasm.
According to data from Vanda Research, the amount of SpaceX shares bought by retail investors in the first two days was equivalent to the retail buying volume across the entire U.S. stock market last week. Max Gokhman, Senior Vice President of Investment Solutions at Franklin Templeton, pointed out that there was a significant build-up of investors off-exchange who previously had no access to the investment, making this massive initial demand unsurprising.
In addition to the micro-level fund inflows, the macro-geopolitical and liquidity backdrop also provided support for the stock's surge.
As the U.S. and Iran announced an agreement to reopen the Strait of Hormuz, coupled with market expectations for a potentially moderately accommodative stance by the Federal Reserve under its new Chair Kevin Warsh, both the S&P 500 and Nasdaq 100 indices recorded significant gains. Angelo Kourkafas, Senior Global Investment Strategist at Edward Jones, stated that the macro background is becoming more favorable, and declining yields may encourage investors to continue moving out along the risk curve.
July 7th: Nasdaq Inclusion Clashes with Extremely Low Float
As the initial frenzy from the listing cools, the market is about to face its first highly trading-sensitive key date: July 7th.
Former Wall Street analyst Alexandra Mertz notes that the Class A shares issued in this IPO represent only 4.3% of SpaceX's total market value, meaning the initial free float is extremely tight.
July 7th is the first trading day after the Independence Day holiday and the 15th trading day post-IPO, when the Nasdaq-100 index will formally include SpaceX. According to Bloomberg, based on calculations by index rebalancing forecasting firm Intropic, due to plans by major indices to rapidly incorporate the stock, the proportion of shares held by passive investors is expected to surge to approximately 30% after 15 days of trading.
At that point, major index funds like Vanguard CRSP and FTSE Russell must make unconditional passive purchases in the open market based on free-float adjustment mechanisms. Market estimates place the scale of this passive buying between $8 billion and $18 billion. Since early shareholders will still be in a lock-up period and unable to sell, the free float in the market will hit its lowest point.
Analysts warn that the direct collision of nationwide passive fund buying with historically low float, coupled with AI model predictions, could drive the stock price to experience an extreme rally during this period.
Late July: True Selling Pressure from Lock-up Expiration and Institutional Bottom Line
The second crucial date demanding high attention falls two business days after the expected second-quarter earnings call in late July. While regular IPO lock-ups typically use simple fixed terms, SpaceX's expiration schedule is precisely tied to the Q2 earnings conference.
Market rumors suggest a massive lock-up expiration for up to 30% of early insider shareholders will follow the earnings call. However, Alexandra Mertz clarifies that approximately 50% of these early insider shares belong to Musk himself, who, as the founder, is subject to an absolute 366-day lock-up. Therefore, the actual potential fresh supply entering the open market is only 10% to 15%.
Even more critical is that early major shareholders have extremely low willingness to sell.
Prominent investor Ron Baron has explicitly stated he will not sell and plans to add $1 billion in the open market. BlackRock has also publicly expressed an intention to buy between $5 billion and $10 billion. As Renaissance Capital senior strategist Matt Kennedy put it, the stock has been "priced to near perfection." When the booster rockets of retail demand fall away, and the stock begins to feel the gravitational pull of selling by institutional investors and employees post-lockup, marginal buyers will become critically important.
The Capital Game Plan: A $7 Billion Tax Event and the "Merger of Equals" Speculation
Behind the meticulously arranged listing, Wall Street is closely tracking Musk's personal financial calendar.
Musk must exercise his stock options from the 2018 Tesla compensation plan by August 15th of this year, triggering a massive personal tax event estimated at $7 billion. Before this key date, the higher the stock price of his assets, the more favorable net share settlement or margin loans become for him.
Market analysts have deduced a "Goldilocks scenario": In the window between the anticipated peak in SpaceX's share price driven by index fund buying on July 7th and the influx of fresh shares during the late-July lock-up expiration after earnings, SpaceX and Tesla could announce a stock-for-stock "merger of equals." This arbitrage mechanism in the public market would perfectly alleviate Musk's funding pressure for the tax bill.
This speculation also seems to have left clues in SpaceX's underwriter list. The IPO unusually included Charles Schwab, Morgan Stanley, and JPMorgan Chase as core underwriters. Market observers believe that granting these institutions, which had previously voted against the Tesla pay package, extremely lucrative IPO underwriting stakes might be to secure their yes votes in a potential merger vote at Tesla's November shareholder meeting.
Furthermore, the governance structure outlined in SpaceX's prospectus provides logical support for this potential merger.
SpaceX's Class B shares carry 10 times super-voting rights, and all shareholder litigation must go through mandatory private arbitration, creating a perfect "founder defense fortress." Analysis suggests that merging Tesla into SpaceX's legal framework is the ultimate capital market solution to fundamentally protect Musk's business empire from interference by activist investors and local courts.
