SpaceX dominates Wall Street after historic IPO and high share volatility

SpaceX was expected to be one of the hottest stocks on Wall Street this year - and it quickly delivered on that promise, breaking trading volume records as companies race to launch new products tied to the role.

Both the size of the IPO and the enthusiasm surrounding it - and CEO Elon Musk - have ignited disproportionate interest from investors.

"I don't recall ever seeing a single stock dominate our clients' activity in this way," said Steve Sosnick, chief strategist at Interactive Brokers, in a note.

SpaceX's action in numbers:

- IPO: Priced at $135 per share
- June 12: The stock debuts at $150 - and closes at approximately $161
- June 16: The stock soars to an intraday high of nearly $226 before closing at $202
- June 23: The stock hits an intraday low of $147 before closing at $156
- June 26: A share ends the week at $153, down 17% on the week
- June 29: Share closes at $164, up 7.15% on the day

Trading frenzy
Charles Schwab, which has offered brokerage services for more than 50 years, told CNN that the day of SpaceX's IPO was among the five highest trading days in Schwab's history.

At market maker Citadel Securities, SpaceX's IPO represented the largest single-day net purchase by retail investors in the company's history, surpassing the previous record by 50%, a company spokesperson said.

The stock's initial appreciation after the IPO briefly lifted SpaceX's market value above that of Amazon and Microsoft. At $150 per share - its debut price - SpaceX still has a higher market cap than Meta or Tesla.

Investors who bought and held stocks are experiencing volatility. SpaceX shares rose 15% in the first week of trading before falling 17% in the second week. But that hasn't deterred people from getting involved.

"Investors who chased the first week's rally were hurt," said Luke Lango, technology analyst and editor of Innovation Investor, in an email.

"This is the oldest IPO story in the book."

"But the underlying business - dominant launch monopoly, profitable Starlink, xAI built into the core - is a story of a decade, not two weeks," he added.

On the Interactive Brokers trading platform, SpaceX has consistently been among the top two most traded stocks every day since its IPO. The only stock that outperformed SpaceX at Interactive Brokers was Micron Technology (MU). Micron soared as part of the chipmaker boom.

"SpaceX has captured the imagination of a lot of traders who are normally very active in Tesla, and they have shifted their focus to SpaceX," Interactive Brokers' Sosnick told CNN in a phone interview.

Jay Ritters, professor emeritus at the University of Florida, told CNN that IPOs with the highest volatility tend to be high-value growth companies.

"These companies almost always grow quickly, but with a lot of uncertainty about how big and profitable they will become," Ritter said. "SpaceX certainly falls into that category."

SpaceX has huge business ambitions, including data centers in space and improving its rocket launch capabilities. But SpaceX is burning cash in its AI business, and investors are betting that the company will be able to achieve profitability in the future.

"I expect the stock to remain volatile for many years to come," Ritter said.

Wall Street and ETFs
SpaceX won't be part of the S&P 500 for at least a year, but it's about to join other popular indices. SpaceX has officially joined the Russell 1000 and will join the Nasdaq 100 in July.

This means that millions of Americans could end up holding the stock indirectly through index funds in personal portfolios or their retirement accounts.

And it's not just traders accumulating positions: Wall Street is building an entire ecosystem around the stock.

Investment firms are launching new exchange-traded funds (ETFs) at a rapid pace to give investors even more ways to interact with the stock.

Leveraged ETFs that aim to amplify SpaceX's performance, providing twice the returns (or losses), are now hitting the market.

SpaceX options trading began last week, allowing investors to make more sophisticated bets on the stock's next moves, and quickly saw a surge in interest.

Elon Effect
SpaceX sells rockets, satellites, internet service and artificial intelligence. But many investors are also buying something else: Elon Musk.

The entrepreneur has one of the most devoted followers in the American corporate world, with investors willing to pay more because they believe in the person running the company as much as - or more - than in the business itself.

"In terms of capturing the public's imagination... it's impossible to look at SpaceX or Tesla without taking into account the Elon Musk factor, and that's very difficult to quantify," Sosnick said.

SpaceX makes the biggest IPO in history and starts trading shares on the US stock exchange | MARKET OPENING

Musk is the richest man in the world - with his net worth topping $1 trillion after SpaceX's IPO - and people want a slice of that successful track record.

"Most of the companies that Elon runs are really not valued based on fundamentals, but rather sentiment," Howard Chan, founder and CEO of Kurv Investment Management, told CNN in a phone interview. "People expect good things from the growth that Elon can potentially bring."

"Anything related to Elon Musk - the Church of Elon Musk - there's always this fervor to get more shares," Chan previously told CNN on the day of SpaceX's IPO.

Understand why Trump accuses Fed director of "mortgage fraud"

Source: CNN