Should You Invest In The SpaceX IPO?

Today’s Letter Is Brought To You by BitcoinIRA ! A few weeks ago I said, “Most of crypto is dead, and most of what’s left isn’t coming back.” The noise didn’t surprise me. The DMs did. Same question, over and over: okay, so what do I actually do about it? This guide is my answer. Download it for free to find out what I actually do about it, and get entered for a chance to win a 1 hr Q&A with myself and up to $4,000 in rewards. Download Free Guide To investors, SpaceX, the leading space company in the world, begins trading today. The company has raised $75 billion at a $1.77 trillion valuation as part of the IPO process. But the number one question investors have been asking me in recent days is “should I buy SpaceX when it starts trading?” I dug deep into the data, so let’s unpack what I found. The company is valued “at ~95x sales, SpaceX is going public at nearly 5x the Nvidia multiple and ~25x the S&P 500.” That sounds expensive, right? Maybe. People have been claiming Tesla, Elon’s other company, is overvalued for almost 15 years. Since Tesla’s IPO, the stock has returned about 25,000% or approximately 40% compound annual growth rate. Not bad for a stock that was widely thought to have a catastrophic demise right around the corner. But SpaceX is not Tesla. You can’t extrapolate the returns of one business to another. We know SpaceX has a monopoly on rocket launches. This has allowed them to service other clients, while also launching their own products into space. The most notable is Starlink, which promises to beam the internet down to consumers, where revenue is scaling aggressively inside the company. Put aside the narrative of the company though. What does the data tell us about these types of IPOs for investors? Creative Planning’s Charlie Bilello put together the top 25 IPOs of the last 15 years and shows the median return after 1-year has been -31%. The median max drawdown from the first day closing price has been over 50%. Not exactly the performance that people will jump out of bed for. Those numbers are for the top 25 IPOs though. If we look at all IPOs, Peter Mallouk highlights “over the last 40+ years, the average US IPO returned just 6.0% annually in its first 3 years, roughly half the return of the broader US stock market.” At least the performance is positive, but still not outperforming the market. Steven Rattner shows this underperformance by writing “day 1 returns are big for those who get allocation, but after the open, investors usually trail the market — by -4.4% for the largest public offerings.” So why is everyone so excited about the SpaceX IPO? Obviously Elon is a big part of the story, but there are weird data points that support the first-day interest. For example, “ IPOs with negative earnings have historically delivered roughly twice the first-day return of profitable ones .” People also love scale. It dominates headlines and drives excitement. And there is nothing bigger than SpaceX when it comes to IPOs throughout history . This brings us to the crux of the issue — investors who are looking at history and data may choose to refrain from investing. You can’t blame them. This would be a rational view to take. History shows mega IPOs have not been kind to investor portfolios. But this is not a random mega IPO. We are talking about Elon Musk, the greatest entrepreneur of our lifetime. He disproved the haters over and over again with Tesla. People hated it and they claimed it was overvalued. They said it would go bankrupt. Yet Tesla continued to find success. And there are a lot of investors who are willing to wager their capital that Elon can defy the haters once again. They aren’t buying SpaceX’s current metrics and financials, but instead willing to take risk by betting on Elon and the future vision he has for the company. I can’t fault these investors for plowing their capital into SpaceX. They are being rational from their perspective too. So this is why SpaceX’s IPO has been heavily debated. Some people are looking at numbers and others are looking at a narrative. Both sides are being rational from their perspective. The market will ultimately be the referee. You have to decide how you want to invest. Do you follow math or do you bet on people. Neither is right or wrong. It is going to come down to your personal strategy. Regardless of your decision, we are watching the biggest show on Wall Street. SpaceX is finally going public after 25 years. Thousands of multi-millionaires are being created in the process. This is a massive win for American capitalism, the American economy, and the broader investment community. Hope you all have a great end to your week. I will talk to you on Monday. - Anthony J. Pompliano Founder & CEO, ProCap Financial (Nasdaq: BRR) The Biggest Bitcoin Myths — And Why They’re Dead Wrong Chris Kline is the co-founder and COO of Bitcoin IRA. In this conversation, we break down the biggest myths about bitcoin — including whether it’s too late to buy, whether it’s too volatile for retirement savings, and whether the government will ever ban it. We also discuss the strategic bitcoin reserve, quantum computing fears, and the convergence of AI and crypto. Get Your Free After Crypto Guide Here: https://lp.bitcoinira.com/after-crypto Podcast Sponsors Figure – True DeFi Democratized Prime to earn ~9% APY! They also have the lowest industry interest rates at 8.91% with 12 month terms! Take out a Bitcoin Backed Loan today and buy more Bitcoin. Check out Figure ! Figure Lending LLC dba Figure. Equal Opportunity Lender. NMLS 1717824. Terms and conditions apply. Arch Public - Arch Public’s cutting-edge algorithmic tools ignite profits, harnessing razor-sharp data analytics to nail perfect entries, exits, and risk management. Turn volatility into opportunity and do it hands free with Arch Public. (Oh, and yes, try us out for FREE too!) BitcoinIRA - Save up to 37% in capital gains taxes on your retirement investments. Signup today and win up to $4,000 in rewards . Simple Mining offers a premium white-glove Bitcoin mining service. Want to grow your Bitcoin stack? Visit https://www.simplemining.io/pomp Uphold - Uphold is the all-in-one platform to trade, earn, stake, and swap across 300+ assets with real-time proof-of-reserves and any-to-any conversions. Manage your entire crypto portfolio in one place at www.uphold.com Bitget - Bitget is the world's largest Universal Exchange (UEX). Trade crypto, gold, forex, stocks and more on one platform. 24/7 access, deep liquidity, low fees, up to 500x leverage. Join Bitget today. Award-winning Fountain Life - Energy supercharged. Memory sharper. Life extended. Ready for the best investment you’ll ever make? Schedule a life-changing call at www.FountainLife.com BloFin - BloFin is a fast-growing cryptocurrency exchange focused on providing professional-grade trading tools, deep liquidity, and a secure trading environment for crypto traders worldwide. Plaud - Plaud builds AI-powered wearable devices designed to help people capture, organize, and recall important information from real-world conversations and moments. You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.