The Real Challenge for Space Exploration Technologies is Not the Post-IPO Dip
The past week has been a roller-coaster ride for the people who invested in Space Exploration Technologies' shares. The company, known for its rocket and satellite-internet services, entered the public trading market with an initial public offering (IPO) at $135 per share. This IPO was the largest ever, valuing the company at a staggering $75 billion. The share price quickly soared to about $200, but has since slipped down to around $185. This is still higher than the initial offer price, but it is low enough to make the investors who bought in during the initial surge feel like they're on the losing side.
While the fluctuating share price is getting a lot of attention, the real test for the company comes towards the end of July or early August. This is when two significant changes are set to hit the shares.
Increased Supply of Shares
A limited amount of the company's shares are available for trading. Only about 5% of the company was floated in the IPO. The rest is tied up, held by employees and early investors who are not allowed to sell yet. This limited availability is partly why the share price has been so volatile.
However, this is set to change with the release of the company's first earnings report. The company opted for a staggered lockup, which means that the first window for eligible holders to sell up to 20% of their locked shares opens soon after the report is released. More shares will be released if the stock has traded at least 30% above the initial offer price in the lead up to the report. The full 180-day lockup doesn't lift until the end of the year, and the largest shareholder's stake remains restricted until the middle of next year. However, the first significant increase in share supply is expected this summer.
First Glimpse at Financial Performance
The same time period also brings the release of the company's first quarterly earnings report. This is the first time the public will get a look at the company's financial performance. The company's prospectus showed a revenue of about $18.7 billion in the previous year, up about a third from the year before, and a net loss of about $4.9 billion. The bulk of the revenue was generated by the satellite-internet service, which brought in $11.4 billion, or about 61% of the total. The rocket-launch business is much smaller, and the recently created artificial intelligence (AI) segment lost more than $6 billion in the previous year, dragging the whole company into a loss.
The first earnings report will reveal whether these trends continued, whether the satellite-internet service kept gaining subscribers after reaching 10 million, and how much money is being spent on the development of the Starship and the AI segment.
Two Big Changes
This summer, the company faces two significant changes - a surge in the supply of sellable shares and the release of the first hard look at a business that is still losing billions a year. Despite this, the satellite-internet service is a profitable and rapidly growing business, and the rocket-launch operation has no real competition when it comes to reusable rockets at large scale.
However, it may be wise to wait until after the first earnings report before deciding whether to invest in the company. This will provide a clearer picture of the company's financial performance and how the stock handles the increase in supply. It's also important to consider whether the stock's value is justified by the size and momentum of the underlying business.
Should You Invest in Space Exploration Technologies Now?
Before deciding to invest in Space Exploration Technologies, it's worth considering the fact that the company didn't make it onto the list of the 10 best stocks for investors to buy now, according to a team of Stock Advisor analysts. The companies that did make the cut are predicted to produce incredible returns in the coming years.
Consider, for example, when Netflix and Nvidia made the list. If you had invested $1,000 at that time, your investment would now be worth $417,305 and $1,293,148 respectively. This is why Stock Advisor offers a distinct advantage with a track record of outperforming the S&P 500 by 4x. Don't miss out on the latest top 10 list, and join an investing community built for the long haul.
The past week has been a roller-coaster ride for the people who invested in Space Exploration Technologies' shares. The company, known for its rocket and satellite-internet services, entered the public trading market with an initial public offering (IPO) at $135 per share. This IPO was the largest ever, valuing the company at a staggering $75 billion. The share price quickly soared to about $200, but has since slipped down to around $185. This is still higher than the initial offer price, but it is low enough to make the investors who bought in during the initial surge feel like they're on the losing side.
While the fluctuating share price is getting a lot of attention, the real test for the company comes towards the end of July or early August. This is when two significant changes are set to hit the shares.
Increased Supply of Shares
A limited amount of the company's shares are available for trading. Only about 5% of the company was floated in the IPO. The rest is tied up, held by employees and early investors who are not allowed to sell yet. This limited availability is partly why the share price has been so volatile.
However, this is set to change with the release of the company's first earnings report. The company opted for a staggered lockup, which means that the first window for eligible holders to sell up to 20% of their locked shares opens soon after the report is released. More shares will be released if the stock has traded at least 30% above the initial offer price in the lead up to the report. The full 180-day lockup doesn't lift until the end of the year, and the largest shareholder's stake remains restricted until the middle of next year. However, the first significant increase in share supply is expected this summer.
First Glimpse at Financial Performance
The same time period also brings the release of the company's first quarterly earnings report. This is the first time the public will get a look at the company's financial performance. The company's prospectus showed a revenue of about $18.7 billion in the previous year, up about a third from the year before, and a net loss of about $4.9 billion. The bulk of the revenue was generated by the satellite-internet service, which brought in $11.4 billion, or about 61% of the total. The rocket-launch business is much smaller, and the recently created artificial intelligence (AI) segment lost more than $6 billion in the previous year, dragging the whole company into a loss.
The first earnings report will reveal whether these trends continued, whether the satellite-internet service kept gaining subscribers after reaching 10 million, and how much money is being spent on the development of the Starship and the AI segment.
Two Big Changes
This summer, the company faces two significant changes - a surge in the supply of sellable shares and the release of the first hard look at a business that is still losing billions a year. Despite this, the satellite-internet service is a profitable and rapidly growing business, and the rocket-launch operation has no real competition when it comes to reusable rockets at large scale.
However, it may be wise to wait until after the first earnings report before deciding whether to invest in the company. This will provide a clearer picture of the company's financial performance and how the stock handles the increase in supply. It's also important to consider whether the stock's value is justified by the size and momentum of the underlying business.
Should You Invest in Space Exploration Technologies Now?
Before deciding to invest in Space Exploration Technologies, it's worth considering the fact that the company didn't make it onto the list of the 10 best stocks for investors to buy now, according to a team of Stock Advisor analysts. The companies that did make the cut are predicted to produce incredible returns in the coming years.
Consider, for example, when Netflix and Nvidia made the list. If you had invested $1,000 at that time, your investment would now be worth $417,305 and $1,293,148 respectively. This is why Stock Advisor offers a distinct advantage with a track record of outperforming the S&P 500 by 4x. Don't miss out on the latest top 10 list, and join an investing community built for the long haul.