SpaceX’s Starhopper on the day of the company’s IPO, in Starbase, Tex., on Friday.Gabriel V. Cardenas/Reuters
SpaceX SPCX-Q roared past Amazon’s AMZN-Q market valuation on Tuesday and briefly topped that of Microsoft, rapidly scaling the list of the world’s most valuable companies on a topsy-turvy trading day fuelled by frenzied action in the firm’s newly listed option contracts.
SpaceX shares were up 10 per cent at US$211.63 after trading as high as US$225.64, giving Elon Musk’s company a market value exceeding US$2.7-trillion – nearly US$1-trillion above its record initial public offering valuation set last week.
The shares have surged as investors pile in to bet on SpaceX’s sprawling empire, which spans rockets to AI.
A big driver of the early surge was Tuesday’s launch of options in SpaceX stock, which confer the right, though not the obligation, to buy or sell the shares at a certain price by a stated date. They are often used by traders seeking to cash in on rising interest in a stock or to wager that shares will rise or fall quickly.
More than 500,000 SpaceX options contracts changed hands within the first hour of trading, according to Trade Alert data. SpaceX’s heavy bullish options trading volume likely helped lift the stock early in the session, said Brent Kochuba, founder of options analytics service SpotGamma.
A surge of options volume can at times cause the underlying stock price to swing as options dealers, who facilitate trading by taking the other side of options trades, buy and sell shares to square their own risk.
“If you’re a market maker, you can’t hedge SpaceX with anything else other than SpaceX,” he said.
Trading volume in SpaceX shares was enormous, with 200 million shares traded at noon ET, according to LSEG data. Turnover in SpaceX shares, reflecting the approximate dollar value of the day’s trades, was highest among large U.S.-listed firms at US$44-billion, outranking chipmaker Micron Technology with US$28-billion.
The latest blastoff in SpaceX shares came on a day when technology stocks were otherwise falling, with the semiconductor index down 3 per cent and the Nasdaq Composite off 0.4 per cent. Among decliners were shares of options exchange CBOE Global Markets, off 6 per cent, while rival CME Group was down 2 per cent, the latest sign of investor angst over the rise of perpetual futures – contracts with no expiration date that enable traders to bet on price moves without owning shares or other assets.
“It’s time to approve regulated futures contracts that have no expiration date,” Commodity Futures Trading Commission Chair Michael Selig said on Monday on CNBC. “We’re going to make sure the product’s available, but it’s well regulated here in the U.S.”
SpaceX to buy Anysphere for $60-billion in AI push
Retail investors – who received about 20 per cent of the SpaceX IPO allocation – bought net US$43.2-million worth of the shares as of 10:10 a.m. ET, building on more than US$200-million in net purchases in the last two sessions, according to Vanda Research data.
“It’s a US$2.5-trillion company, but it certainly feels like one of those meme stocks, the way it’s trading,” said Joe Saluzzi, co-head of equity trading at Themis Trading.
“We’ve seen momentum in the past; they just tend to run and you have to be very, very careful with these types of names.”
Analysts and portfolio managers said investors should brace for volatility due to the relatively small float and high valuation of SpaceX.
The company reported sales of US$18.67-billion last year and a net loss of US$4.94-billion after merging with money-losing xAI – in contrast to many of Wall Street’s big technology companies that have posted bumper numbers.
On Tuesday, its market value surpassed Amazon’s at US$2.65-trillion and briefly topped Microsoft’s US$2.92-trillion. Next up are Apple, Alphabet and Nvidia, all above US$4-trillion in market value.
Analysts and investors said the rally could continue as SpaceX is set for fast-track inclusion in the Nasdaq 100, which will soon make it a major holding for passive funds and ETFs that track the index, creating a fresh source of demand for its shares.
FTSE Russell and MSCI are also set to add the stock to their indexes, effective June 26 and June 29, respectively.
“While index inclusion alone is typically insufficient to drive sustained repricing, we see the combination of passive flows, momentum, and limited float driving upside beyond historical index-addition moves,” brokerage Zephirin Group said, initiating coverage on the stock with a “buy” rating.
SpaceX also said on Monday that its underwriters had exercised the “greenshoe” option to purchase additional shares, increasing the total proceeds from its initial public offering to US$85.7-billion from US$75-billion that it raised last week. Earlier in the day, SpaceX also said it would acquire software company Anysphere for US$60-billion.