Article published at 8:45 a.m. CT
JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Trading is all about SpaceX IPO today
- Markets embrace possible ‘great settlement’ with Iran
- Adobe’s losing two top executives as well as share value
Buckle up! Investors – and anyone paying the least bit attention to the markets today – will witness history as SpaceX’s initial public offering hits the tape. All eyes will be on the IPO that will not only create a new class of millionaires and the world’s first trillionaire, but an entire economic sector in space.
Trading under the ticker symbol SPCX probably won’t officially start until early afternoon at best. It’s a complicated undertaking to shake out the stock price in what is likely to be volatile trading today for the newcomer. It’s also a test of technology as the Nasdaq system may potentially get flooded with orders. Everyone prefers this to go slowly and work well with other interesting l ppl IPOs on deck.
Late yesterday, the aerospace maker affirmed its $135 a piece offering price of 555,555,555 shares, aimed at raising $75 billion that would create a heart-stopping valuation of $1.77 trillion. That final raise will no doubt fluctuate as its trading commences today and in the following weeks and months. It’s also widely believed the offering will become a yardstick for upcoming IPOs for the likes Anthropic and OpenAI, both of which have confidentially filed with the Securities and Exchange Commission (SEC) to go public later this year with valuations approaching $1 trillion.
SpaceX also said in a statement last night that it is granting underwriters what’s called a “greenshoe” option to purchase an additional 83,333,333 shares of its Class A common stock at the IPO price. That’s partly done to stabilize the price amid early trading volatility. If exercised, that would represent another $11.2 billion in capital into the firm, pumping its valuation to $85.7 billion.
Meanwhile, the broader markets are moving to the upside amid hope that some sort of agreement will get knocked out between the U.S. and Iran. President Trump called off planned air strikes yesterday and said the two reached a “great settlement.” But Iran’s foreign ministry spokesperson Esmail Baghaei said reports of an agreement were “speculative” and “nothing has been finalized,” according to the BBC. If a pact is inked as soon as this weekend, it will be a memorandum of understanding that could take weeks before a final accord is ironed out.
Still, hopes of the Strait of Hormuz reopening are draining crude oil prices. WTI crude, which has been trading at $89 a barrel for much of this week, was falling in the early going to about $84 a barrel.
Among other stocks, shares of Adobe were tracking lower by about 7% after the software company announced that Dan Durn, its chief financial officer, will be leaving next week to join Marvell as its CFO. Three months ago, Shantanu Narayen, its chief executive officer, said he would give up his role after 18 years when a successor is named. That leaves a leadership gap that is troubling investors who are pushing the shares down some 7%.
This week’s trading scene can be called chaotic at best. Investors have jumped in and out of tech shares all week, whipsawing the sector, particularly AI-related stocks, amid geopolitical tensions and the SpaceX IPO. The Wall Street thinking on this messy week is that investors were rotating out of a number of stocks as the quarter is coming to an end. Portfolio managers are reassessing their investment decisions as well as keeping “powder dry” with a potential of a war settlement and today’s IPO to see where things may settle
Yesterday’s rally gained even more steam after the air raids were called off, juicing the market’s three major indices. The Dow Jones Industrial Average advanced 1.9% and the Nasdaq Composite jumped 2.5%. The S&P 500 moved ahead 1.8% as the materials, industrials and tech sectors all advanced in low single digits, but the energy sector tumbled better than 2%.
Oracle shares missed the rally again yesterday, sinking another 9% as investors struggle with its plans to raise $40 billion next year to add to its already debt-heavy balance sheet. What’s been described as a “staggering backlog of future business” requires Oracle to attain massive amounts of capital, not unlike other tech businesses in the AI arena. Shares have sunk 44% since September; nearly 26% just since the start of this month.
Other software and infrastructure holdings were pushed down yesterday, including Salesforce, which lost 3%, and Microsoft backtracking by 1.8%.
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