Tag: SPCX

We remain short Spacey.

Positions: Short $SPCX

And when I was twelve years old
My daddy took me to the circus
The greatest show on Earth
There were clowns and elephants, dancing bears
And a beautiful lady in pink
Tights flew high above our heads

And as I sat there watching
I had the feeling that something was missing
I don’t know what, but
When it was over
I said to myself
Is that all there is to the circus?

– Peggy Lee, Is That All There Is?  Peggy Lee — Is That All There Is? 1969

Yesterday we all saw a constant parade of interviews on Fin TV with interested (and biased) SpaceX ($SPCX) parties (founders, long-time private market investors, board members, management and those that got stock in the IPO – even a few Wall Street firms that were launching leveraged ETFs on SpaceX). To a person they waxed enthusiastically (but vaguely with glittering generalities) about the almost insane TAM (total addressable markets) that the company faces.

To Mars and beyond…. was the prevailing mantra.

There was not one interview with a skeptical analyst/observer.  Key man risk, execution risk, etc. were glossed over.

But there is another thing that was not emphasized… that is a key reason why the shares are currently trading more than 50% higher than the IPO price of $135/share. 

I am sorry to break this news to the business media and to investors/traders but one of the most important reasons that SpaceX is trading anywhere near its current level is that the float is extremely small — in absolute terms and relative to the index inclusions, volume of options trading, hype and other choreography.

Is that all there is
Is that all there is?
If that’s all there is my friends
Then let’s keep dancing
Let’s break out the booze and have a ball
If that’s all there is

Position: Short SPCX (VS)

“The danger is that once a company reaches sufficient scale, the distortion itself becomes systemic. Every passive fund has to own it. Every major index becomes dependent on it. Pension funds, retirement accounts, sovereign wealth funds, insurance companies and institutional portfolios all become increasingly exposed to the same trade. The higher it goes, the more unavoidable it becomes.

And that’s the part that nobody seems to understand. If SpaceX eventually reaches $10 trillion through a combination of hype, narrative, mechanical flows and options-driven feedback loops, it won’t just be a SpaceX story anymore. It will become the market. Its movements will increasingly dictate the performance of indexes, ETFs and retirement accounts across the entire financial system. The market will effectively become a referendum on a single stock.

That’s how bubbles become systemic. Not when they’re small enough to laugh at, but when they become so large that everyone is forced to participate. The same mechanisms pushing prices higher today eventually create the conditions for instability tomorrow. When trillions of dollars of wealth become tied to a valuation that was never anchored to fundamentals in the first place, even a modest reversal can have consequences far beyond the stock itself.”

– Excerpt, Quoth The Raven

I have been writing ad nauseum about how market structure has created market risk and has distorted price discovery.

We may be seeing those distortions now and in the immediate future in the shares of SpaceX ($SPCX) — something no in the business media is discussing.

From my friend, Quoth The Raven:

SpaceX Could Get Dangerously Systemic

Position: None