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In 2017, legendary billionaire investor Ron Baron made a big bet.
His firm invested in SpaceX when the company was valued at less than $22 billion.
Now, with SpaceX going public today, that bet could go down as one of the great investments in history. So, let’s give credit where credit is due.
But folks, before you think about buying SpaceX now that it’s public, you need to think about your risk tolerance and ask yourself:
How much risk can you stomach?
A billionaire like Baron can make a huge, concentrated bet on Elon Musk. He can wait years for it to pay off. He can ride the ups and downs. He can afford to be early and patient.
Most investors cannot afford to do any of those things.
And that is the real lesson I want you to think about as SpaceX begins trading.
So, in today’s 蜜桃传媒 360, let’s talk about how investors should handle SpaceX now that it is public and the three reasons why I do not recommend buying SpaceX stock right now… and a new tool that can help you time the market better and make bigger gains – so you don’t have to ride the emotional roller coaster on the way to profits.
Reason No. 1: IPOs Are Risky
Now, let me first say that I think SpaceX is a wonderful company. Starlink makes money. SpaceX makes money. But a great company can still be a risky stock if you buy it at the wrong price, at the wrong time.
Case in point: Facebook, now known as Meta Platforms, Inc. (META).
Facebook went public on May 18, 2012. At the time, it was one of the most anticipated IPOs Wall Street had seen in years. Investors were clamoring to get in. The stock was priced at $38.
The FOMO was real. Then reality set in. By August 2012, Facebook had fallen to about $17.50. That was a loss of more than 50% from the IPO price.
Now, Facebook eventually became a tremendous long-term winner, up more than 1,300% since it first went public. But investors who chased the IPO still got taken to the woodshed.
That wasn’t some one-off case, either. Amazon.com, Inc. (AMZN) became one of the greatest stocks of all time – but it first fell more than 90% from its dot-com peak. Alphabet Inc. (GOOG), then Google, became a monster winner – but only after testing investors’ patience with steep pullbacks.
Bottom line: Great stocks do not move in a straight line.
That is why I have a simple rule when it comes to IPOs. I usually wait at least a year before I buy.
That may sound boring when everyone is talking about a stock that could soar on its first day of trading. But I have been doing this for nearly five decades, and I have learned that the best time to buy a great company is not always the first time Wall Street lets you buy it.
When a company goes public, there is usually a lockup period for insiders. They cannot immediately sell their shares. But once that lockup expires, a lot of stock can come onto the market, creating selling pressure.
We saw something similar recently with another space-related stock, Rocket Lab Corporation (RKLB). As excitement around SpaceX picked up, a lot of Rocket Lab insiders were cashing out. So do not be surprised if some SpaceX insiders eventually sell after their lockup period expires.
Reason No. 2: No Fundamental Data
The second reason is I want to see the data.
After a company has been public for a year, I can calculate reward-to-risk. I can look at alpha. I can study standard deviation. And I can get four quarters of fundamentals to see whether the stock fits my eight-factor fundamental model.
In other words, I can stop guessing. My Stock Grader tool can give it a simple ranking of A to F, giving my followers and me a clear understanding of whether to buy it.
That matters with SpaceX because it’s a complex business. You have the launch business. You have Starlink. And you have other long-term projects that could eventually become very valuable – or not.
But as an investor, I want to know which part of the business is driving the growth. That is one of the main reasons I am willing to wait. Right now, SpaceX’s future as a public company is still speculative. A year from now, we should have a much clearer picture.
Reason No. 3: The Elon Musk Factor
I should also add the Elon Musk factor.
I am not here to dispute the man’s genius. Elon Musk helped reinvent the auto industry. He helped restart America’s space ambitions. He built the world’s largest satellite internet network. He turned Tesla, Inc. (TSLA) into one of the most valuable companies on the planet.
That is an extraordinary record. But investors need to ask a very practical question:
Can you afford the volatility that comes with Elon Musk?
When you invest in a Musk-led company, you are not just investing in the business. You are also accepting the market’s reaction to Elon Musk himself.
We have seen that with Tesla. A single Musk headline can move billions of dollars in market value. His political comments, public battles and unpredictable behavior have all created added volatility around the stock at different times.
That does not erase what Musk has accomplished. But it does add another layer of risk.
The Smart Move This Summer
The reality is there is still a tremendous amount of money sloshing around. When I was on Maria Bartiromo’s Fox Business show recently, she pointed out that there is about $7 trillion in cash on the sidelines.
Some of that money will naturally gravitate toward the market.
High-profile IPOs like SpaceX, Anthropic and eventually OpenAI could help pull more of that money into stocks. That is bullish for growth stocks and suggests investors still have a strong appetite for innovation.
But bullish does not mean blind, folks.
June is a seasonally strong month, helped by the annual Russell realignment. We should also have another great earnings announcement season kick off in July. But as we get into August and the first half of September, we’ve entered the seasonally weakest period for the market.
So, if we see drawdowns or stair-steps lower this summer, I will not be surprised.
Bottom line: This is still not a market where you can afford to guess or ignore your risk tolerance. You need to know what you own. You need to know what you are missing. And you need to know when to be aggressive – and when to be cautious.
That is exactly why I sat down with TradeSmith CEO Keith Kaplan earlier this week.
During our , we discussed why today’s market reminds me of the late 1990s, why I believe the AI boom still has much further to run and how a new AI-powered tool could help investors become more tactical as volatility picks up this summer.
It works by taking my financial analysis, and combining it with a new system developed by my friends over at TradeSmith. And then it adds a revolutionary new form of AI to give investors the best possible shot at massive, rapid-fire gains.
We also share two stock picks – absolutely free.
I strongly encourage you to watch it as soon as you can.
Sincerely,
Louis Navellier
Editor, 蜜桃传媒 360
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Alphabet Inc. (GOOG) and Rocket Lab Corporation (RKLB)
