Chart of the Week: Holiday

SpaceX’s compelling growth story may not be a good investment at its current price because heavy investment needs and a large future release of shares could weigh on returns.

• Investor enthusiasm pushed SpaceX shares sharply higher after its IPO, but the stock subsequently fell below its listing price.
• SpaceX reported first-quarter revenue of $7.81 billion as a public company, yet still posted a net loss of $541 million.
• Capital expenditure reached $18.4 billion, reflecting the scale of funding required for its rocket, satellite and artificial-intelligence ambitions.
• Only a small portion of the shares was available to trade at listing, while more stock is scheduled to become eligible for sale over the following year.
• The potential release of Elon Musk’s 46.1% stake creates a share overhang; the price could suffer if buyer demand does not absorb the additional supply.

Takeaway: Investors should separate an exciting business from a good investment, resist IPO-related FOMO and consider waiting for a better price, while recognising that not all eligible shares will necessarily be sold.