How To Trade an IPO Like a Pro: The SpaceX Debrief

Five weeks after the SpaceX IPO, the questions keep coming. So, let’s do a debrief.

First, I have never seen so many people with such irrational expectations around a market event in my 22+ years of trading. It was a complete disconnection from reality. That said, the day before I laid out three potential scenarios and gave my opinion as to which one was likely.

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The Big Picture

I nailed it. Now, I don’t say this to brag. My goal is to give you insight into my thought process on the Space Exploration Technologies Corp. (NASDAQ: SPCX) IPO.

I said everything there was to say about the SpaceX IPO the day before on the IPO Trader Workshop.

So, none of this is revisionist history. I’m not here a month late saying “Oh, I knew the fade on SpaceX was coming.” I said it then, and fade it did…

Let’s start with…

My 3 Scenarios for the SpaceX IPO

Here are the three possible scenarios I laid out:

1. SPCX does nothing and goes sideways. Which means you wouldn’t do anything. Trading with FOMO gets people in trouble more than any other single thing.
2. The stock goes bananas and makes a parabolic move in a buying frenzy. Remember, the stock market is an auction. There is nothing to stop a stock from going higher as long as there are buyers willing to pay more. In this scenario, my recommendation was to buy the exhaustion gap defined by an RCT.
3. The IPO is a liquidity event. SpaceX did everything possible to make the stock accessible to retail traders.

Now, during the workshop I went into great detail about trade setups for each of the three scenarios, so I won’t repeat them here.

I also said that number three, the IPO as a liquidity event, was most likely. I thought it would bag a bunch of people and eventually trade below $100 per share.

Why?

The SpaceX IPO Was a Never-Seen-Before Event

I believe Elon, the banks, and Wall Street took advantage of the euphoria. Rules got changed, including the new 15-day Nasdaq-100 “Fast-Entry” and elimination of the 10% float rule.

Now, before anyone says I’m bashing SpaceX, let me remind you…

I believe SpaceX is going to be the most successful, most profitable company, possibly in history.

So, if I have an opportunity to buy 20%, 30%, or even 40% lower, that’s what I want to do. Let’s see how far down it goes.

My Take

Again, the irrational exuberance was off the charts. People did not take a professional approach. In fact, their thinking was a list of terrible ideas.

Many people who had never bought stocks in their life…

• Went “all in” on one stock (terrible idea)
• Traded with borrowed money (terrible idea)
• Entered with no plan (terrible idea)
• Bought the stock thinking it was a sure thing (terrible idea)

My contrarian call was that this thing would sell off over weeks, or even months, and eventually base long enough to establish a support level. Are we there yet?

Watchlist

Why, SPCX of course! The time is coming, my friend.

SpaceX scrubbed its first Starship launch since the IPO on Thursday evening (July 16). The stock dropped $6 per share in four minutes.

Again, I love this company. And I want to own it. But I’ll wait until SPCX bases long enough to establish support and then buy the trend change. So far, it’s beautiful.

On My Radar

• A tip for newer traders
• Moonshot says its Kimi 3 open-source model will rival Anthropic and OpenAI
• At least capitalism is still more popular than socialism
• So much for downsizing
• In case you missed it, my Sunday Market Brief replay