Hey {{First Name}}, there’s one question on every investor’s mind right now…

“Should I buy SpaceX shares when they go live on Friday morning?”

So today I want to answer that the most honest I can, and that’s by looking at what actually happened in every hyped mega-IPO of the past 20 years…

And here’s what most people don’t understand…

The first 60 days of SPCX will have very little to do with rockets, and everything to do with something else...

The pattern is remarkably consistent...

Facebook went public in May of 2012 at $38 per share and roughly 100 times earnings... It was the most hyped IPO of its era, and it was trading near half that price by September.

Snap popped 44% on day one in March of 2017, and then broke below its IPO price the moment its first earnings report disappointed two months later...

Coinbase opened at $381 in April of 2021 and hit its all-time high that same afternoon... Then it crashed more than 40% within the next six weeks…

And Rivian was the wildest of them all... It launched at $78 in November of 2021, ran to $179 within a week on pure mania, and then gave back every penny because there was no business underneath the story yet… (They were still pre-revenue).

On the other hand, Google and Alibaba popped on day one and just kept climbing... and chip-maker, Arm, dipped below its IPO price for months before exploding higher...

Here’s the biggest tech IPO’s over the first 60 days…

And here are the same stocks after 12 months…

Two things...

1: Whether or not the first earnings report validated the story…

When a company IPOs, all anyone has is a sales pitch...

The first earnings report is the first time the public gets to look under the hood and see if the actual numbers match the hype... When they did with Uber, the stock kept climbing. When they didn't with Coinbase, the stock collapsed…

2: And second, how stretched the valuation was on day one relative to the actual business…

Every stock has a price, and every business has real earnings underneath it... The "valuation" is just he relationship between the two... How many dollars you're paying for every dollar the business actually produces...

Think of it like buying a rental house... If a house generates $20,000 a year in rent, paying $400,000 for it might be reasonable. Paying $2 million for that same house means you're not buying the rent checks anymore... you're buying a story about what the neighborhood might become someday.

There's nothing wrong with paying up for a great story... But the further the price gets from the actual numbers, the further the stock can fall when the excitement wears off, because there are no profits underneath to catch it.

Facebook went public at roughly 100 times its earnings... Meaning investors paid $100 for every $1 of profit when the historical average for the market is closer to $15-20.

And Rivian didn't have a single dollar of revenue at all... So when the hype faded, both stocks got cut in half because there was nothing holding the price up but the story.

Simply put, the day-one pop predicted NOTHING... But the first earnings report predicted almost everything.

With this in mind, SpaceX’s first big earnings report will be released in July, and it will mostly show the OLD SpaceX business model numbers from profitable launches and Starlink, and an AI division creating billions in losses… (The financials aren’t awesome).

But over the past five weeks, SpaceX's valuation story has changed...

On May 6th, SpaceX disclosed that Anthropic (the AI company behind Claude) signed a deal to pay them $1.25 BILLION PER MONTH through May of 2029 for exclusive access to their Memphis data center... And last Friday, Google signed a similar deal worth $920 million per month starting this October.

Add those contracts together and you get roughly $26 billion per year in locked-in revenue from a company that did $18.7 billion in TOTAL revenue last year…

Two customers just doubled the size of this company with a couple of signatures...

But here's the problem... The Anthropic money only just started flowing, and Google doesn't pay a dime until October.

Which means these new financials won’t show up until the second report in October or November this fall.

So we have a stock priced really high based on the old story, a first earnings report reflecting the old story as well, and savyy investors who know what’s going to show up in it’s second earnings report this fall…

Wall Street has engineered this IPO unlike anything we've ever seen...

Index funds like QQQ are required to own every stock in the Nasdaq-100, regardless of price. So on July 7th, they'll be forced to sell billions in Apple, Microsoft, and Nvidia... and buy SpaceX at whatever it costs that day.

SpotGamma estimates $22 to $27 billion of forced buying will hit one of the smallest floats in IPO history...

Simply put, a massive buyer who doesn't care about price is guaranteed to show up on a known date, while the people holding most of the shares are legally forbidden from selling to them.

That's how you engineer a squeeze to the upside...

Days 1-3: A hot open with violent swings...

Days 4-15: A grind higher into the July 7th index inclusion... (It’s worth noting that when Tesla joined the S&P 500 in 2020, the run peaked almost exactly at the inclusion event, because once the forced buyer is done buying, there's nobody left to buy...)

Late July: The first REAL test... The first earnings report, combined witha 20% insider unlock two days later.

October/November: This is when the second earnings report will be released which will contain the significantly better financials that reflect the compute deals with Google and Anthropic… (And I expect more deals like this to be announced).

Buying the IPO on Friday isn’t investing, it’s gambling… You’re placing a bet that the stock price could go up or down based on the emotions of humans, so just understand what you’re getting into.

There’s not a single person on this planet who knows what the stock price will be a week from now, or a month from now…

So if you’re are making an emotional decision based on greed or the fear of missing out, you’ve already lost the plot…

I believe SpaceX will be one of the most valuable companies on Earth 20 years from now, and a foundational asset to pass down to our kids.

And unless you have a time machine, the only real way to actually “invest” in this company is to ignore the short-term hype, and just dollar-cost-average into it for the next 10 years…

That means consistently accumulating a little bit more every single day automatically, no matter what the price is.

If the price goes up, you win…

If the price goes down, you’re buying more shares for less money, which means you also win…

In my opinion, the only way to lose is to have a short-term trader’s mindset trying to guess which way the price will go…

Will I buy some shares on Friday? Yep. But it will be a modest amount of money that I can afford to lose.

And that same day I’ll setup an automated market buy that will purchase a fixed amount of SpaceX (say $50 to $100/day for example), every single day for the next 10 years just like I do with Tesla...

My goal isn’t to bet or trade…

It’s to accumulate as many shares of SpaceX as I can over the next 10 years because consistent asset accumulation = wealth accumulation, and I believe SpaceX will be one of the most valuable companies in the world a decade from now.

Any big drops in price between now and then are the opportunity.

Sincerely,

Mike Dillard ✞
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