SpaceX is set to debut on the Nasdaq this Friday, with its options trading beginning on June 16th. This rapid timeline leaves investors with limited data to assess how the IPO will perform over time. Dennis Davitt, CIO of Millbank Dartmoor Portsmouth, highlighted the difficulties in hedging for this IPO, noting that unlike past tech IPOs, there are no comparable stocks to use for risk management.
The company's private market valuation has nearly tripled in the past year, increasing the associated risk for investors holding SpaceX equity. Davitt compared the situation to the IPO of Google in 2004, emphasizing that the absence of direct proxies makes hedging particularly challenging.
He expressed skepticism about the stock experiencing extreme price fluctuations on its first day, predicting a more muted price action.
Additionally, Brent Kochuba, founder of Spotgamma, warned that the initial trading environment for SPCX could be difficult, characterized by wide spreads and high implied volatility, compounded by external factors such as the FOMC meeting and upcoming options expirations