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I’ve been digging into the SpaceX IPO, and there’s a fascinating layer to this story that nobody’s really talking about yet.
Sure, everyone’s focused on the valuation. And yes, it’s going to be inflated — probably massively so.
But here’s what caught my attention: The game theory unfolding behind the scenes as rating agencies and index determiners race to figure out which index SpaceX will land in.
Some of these agencies are even speeding up their evaluation processes just so they can get SpaceX into their index. That almost never happens, and it speaks to how unprecedented this event is in modern markets.
Retail investors will create the initial pop, no question. But the real story here is the structural buying pressure from index funds.
Once SpaceX gets assigned to a major index, those funds have no choice — they have to buy. That’s forced demand, regardless of what the valuation looks like.
And here’s the part most people don’t account for: IPOs, historically, aren’t great performers once the early excitement fades.
The data on new listings isn’t pretty, and many of them struggle after that first burst of enthusiasm. Forced buying can push valuations up for a time, but it doesn’t override fundamentals forever.
That gap between market structure and intrinsic value has closed painfully in past cycles, and SpaceX won’t be immune to that dynamic.
The Callaway Golf Moment
This reminds me of when I was working at Bateman Eichler Hill Richards in Los Angeles right out of college and Callaway Golf went public.
Everyone wanted shares. Clients were calling in asking for allocations left and right. It was a frenzy.
That kind of enthusiasm taps into something deeper. During the dot-com boom, I had a front-row seat to the psychology behind these moments.
There’s a reason people call it FOMO. It’s a visceral reaction — the fear of watching everyone else get rich without you.
Even professionals who should have been grounded in value discipline struggled to hold their positions when the crowd was stampeding in one direction.
The energy swirling around SpaceX today feels very similar.
Why Elon Changes the Equation
Look, I’m not dismissing the valuation question. It’s real. And yes, I think SpaceX is overvalued heading into its IPO.
But valuation alone won’t dictate what happens early on. Market structure sometimes takes the wheel, and this is one of those moments.
Even exchanges like Cboe Global Markets (CBOE) could end up being some of the biggest winners simply because of the trading volume this event will unleash.
Then there’s the Elon Musk factor. His imagination has no bounds, and he’s been able to not just dream, but execute.
When I’m out for a walk in the evening here in Tucson, I’ll look up and see six satellites flying across the sky almost every night.
They don’t look like airplanes. They look like stars streaking through the dark.
That’s Starlink, quietly humming above us, a visible reminder that Elon doesn’t just pitch bold ideas, he makes them real.
Now he’s talking about data centers in space. Some people dismiss it as too far off, but if anyone can pull something like that off, it’s him.
That’s why, even at inflated valuations, you could still see a five- to 10-times opportunity here.
Not because it’s guaranteed, but because the combination of forced index buying and Elon’s execution track record makes this a very unusual setup.
Moments like this also remind me of times when resisting the crowd paid off.
I’ve held off on hyped investments before, only to buy when the valuation finally made sense and watched them go up five or even 10 times afterward.
In hindsight, patience looks like brilliance, but in the moment it feels like you’re standing in front of a tidal wave.
SpaceX may ultimately give investors the same chance, even if FOMO makes it hard to wait. This is one of those capital markets case studies that just fascinates me.
The mechanics here are unlike most IPOs, and it’s worth paying attention to how this unfolds.
Talk soon,
JD
The Rational Trader
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Insiders are moving wildly this week!
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