Australian retail investors are demonstrating robust demand for Elon Musk’s rocket and artificial intelligence company, SpaceX, even as institutional shareholders divest, pushing the stock below its initial public offering price. SpaceX is a company focused on advanced rocketry and space exploration, with plans including colonising Mars and building data centres in space. It also runs xAI, the developer of the Grok AI platform. The company’s share price initially surged 50 per cent to approximately US$202, before falling below US$111, an 18 per cent drop from its IPO price last week.
This market dichotomy is evident in trading patterns. CommSec, a Commonwealth Bank subsidiary, reported 28,000 customers bidding for SpaceX shares, raising an estimated A$1 billion, following a significant increase in international trading accounts. Similarly, data from CMC Invest reveals strong retail conviction, with 90 per cent of all SpaceX orders being buys. Conversely, hedge funds have capitalised on the decline; for instance, Minotaur’s Thomas Rice reportedly netted a 30 per cent paper profit by shorting the stock at US$170.03, even increasing his position last week.
SpaceX is widely considered one of the most divisive stocks on the market, with expert opinions ranging wildly from a Morningstar fair value estimate of US$63 to another analyst’s projection of US$800. Proponents cite Elon Musk’s history of achieving ambitious goals, while skeptics point to its implied valuation despite ongoing losses, comparing it to the dot-com bubble. The upcoming expiry of a share lock-up period on August 6, coinciding with its first earnings report, is expected to be a critical test. Morgan Stanley analysts suggest this event could drive the stock closer to US$100. Despite this, nearly 80 per cent of Wall Street analysts recommend buying, with an average price target of US$232, though some fund managers remain cautious due to future unpredictability.
