SpaceX Jumps 20% After IPO With $13 Billion-$17 Billion of Index Buying in View

"SpaceX May Draw $13 Billion-$17 Billion of Buying Through Next Month

August Is the Key Juncture as Lockups Expire"

What Could Move SpaceX Shares Next

MSCI and FTSE Inclusions to Follow

Nasdaq-100 Addition Could Come in Early July

Lockup Shares to Be Released After August Earnings

53.7% of Total Shares May Be Unlocked by Year-End

Concerns Persist Over a "Musk-Centric Ponzi Structure"

Global investors are closely watching the path of SpaceX shares after the company pulled off the largest initial public offering on record. Inclusion in major global indexes including the Nasdaq-100 and MSCI is expected to bring fresh inflows and support the stock in the near term. After August, however, volatility may rise as lockup restrictions are lifted in stages and existing shareholders gain the ability to sell.

A Wave of Lockup Expirations Starts After August

According to the securities industry on June 15, SpaceX began trading on the Nasdaq on June 12 and finished at $161.10, up 19.3% from its IPO price of $135 a share. In the near term, the stock stands to benefit from a series of additions to major global indexes.

FTSE Russell granted SpaceX eligibility for inclusion in Russell and FTSE indexes under its fast-entry rules. That means passive funds tracking indexes such as the Russell 1000 could begin buying the stock from June 18, after five trading days have passed since the listing. MSCI also applied its early-inclusion rule for large IPOs to SpaceX, clearing the way for the company to join related indexes on June 26, its 10th trading day. The Nasdaq-100 may also add the stock around July 6. As of last year, assets tracking the Nasdaq-100 through exchange-traded funds, derivatives and mutual funds totaled $1.4104 trillion. KB Securities estimates mechanical buying through FTSE, MSCI and the Nasdaq-100 could reach $13 billion to $17 billion over about three weeks after the listing.

Investors also need to watch the staged release of locked-up shares beginning in August. SpaceX's initial free float was 4.3%. Around August, when the company is set to report second-quarter earnings, as much as 20% of the locked-up shares may be released. Another 10% could be unlocked if the stock trades at least 30% above the IPO price, or $175.50 a share, for five of the 10 trading days after the earnings release. Lockups would then unwind in stages, with all restricted shares released around December. Those shares account for 53.7% of SpaceX's total stock.

Krugman Says Musk Empire Has a Ponzi Structure

Investors are also watching SpaceX's complex ownership and business ties with other Elon Musk-controlled companies. Tesla invested $2 billion in artificial intelligence company xAI around 2022, and xAI merged with SpaceX in February this year. That has drawn criticism from investors who argue that Starlink's profits are effectively being used to support lossmaking xAI through the IPO structure. SpaceX also received a $2 billion capital injection from Tesla. SpaceX and Tesla have also announced plans to jointly invest $119 billion to operate a semiconductor plant called TerraFab. Musk called that project "a key driving force" in advancing the companies.

Even so, some investors continue to express concern about a governance structure concentrated in Musk alone. Bloomberg reported that Musk could retain 85% of SpaceX's voting rights even after the IPO and cannot be removed. Before the IPO, AkademikerPension, a Danish pension fund managing $25 billion, called the governance structure that concentrates voting power and board appointment authority in Musk "catastrophic" and said it would not invest in SpaceX.

Paul Krugman, the Nobel Prize-winning economist and a professor at the City University of New York, also criticized Musk on his website, calling his "corporate empire" a human Ponzi scheme. Krugman wrote that Tesla helped open the electric-vehicle market and that Starlink is an important service with a viable business model. But he argued that Musk's wealth has rested on a self-fulfilling belief: Investors buy shares in his companies because they believe in his genius, and rising stock prices in turn reinforce that reputation.

Kim Dong-hyun, Hankyung.com reporter 3code@hankyung.com