In a market like this, you don’t want to be chasing the next rocket ship. You want to follow the data.
Listen to the audio version of this article (generated by artificial intelligence).
Editor’s note: SpaceX, now a public company, has made impressive progress in rocket manufacturing. An early investor like Ron Baron would likely benefit from the company’s IPO, given his pre-IPO investment of $22 billion. but, Louis Navellier I agree – now is not a good time for ordinary investors to buy SpaceX stock.
To share his perspective, I invited Lewis to today’s meeting Smart money To explain why he sees SpaceX as a risky bet. It will review the history behind popular IPOs, the data problem, and more. He then shares what investors should do instead in today’s market.
And if you’re interested in dealing with a potentially more volatile summer, I also encourage you to watch Lewis’s latest show with TradeSmith CEO Keith Kaplan. Lewis explains why investors may need a more tactical approach in the coming months and how a new AI-powered tool can help us evaluate opportunities and manage risks. You can watch the replay here.
Take it away, Louis…
In 2017, legendary investor Ron Barron made the bet of his life.
His company invested in SpaceX when the company was valued at less than $22 billion.
Now that SpaceX has recently gone public, this bet could be considered one of the greatest investments in history. So, let’s give credit where credit is due.
But folks, before you consider buying SpaceX now that it’s gone public, you should consider your risk tolerance and ask yourselves this:
How much risk can you really take?
A billionaire like Barron could make a huge, focused bet on Elon Musk. He can wait years for it to bear fruit. He can ride ups and downs. He can be early and patient.
Most investors can’t do any of these things.
And that’s the real lesson I want you to think about when SpaceX goes public.
Today, let’s talk about how investors are treating SpaceX now that it’s a public company and the three reasons why I don’t 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 an emotional roller coaster on your way to profits.
Reason #1: IPOs are risky
Now, let me first say that I think SpaceX is a great 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. (dead).
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 price was $38.
The FOMO was real. Then reality set in. By August 2012, Facebook’s price had fallen to about $17.50. That was a loss of more than 50% of the IPO price.
Now Facebook is finally a huge long-term winner – its shares have risen more than 1,300% since it first went public. But investors who chased the IPO were taken to the woodshed.
This was not an isolated 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 company (Google), then Google, which achieved a huge win – but only after testing investors’ patience with sharp declines.
Bottom line: Great stocks don’t move in a straight line.
That’s why I have a simple rule when it comes to IPOs. I usually wait at least a year before I buy.
This may sound boring when everyone is talking about a stock that can rise on its first day of trading. But I’ve been doing this for nearly five decades, and I’ve learned that the best time to buy a great company isn’t always the first time Wall Street lets you buy it.
When a company goes public, there is usually a lock-in period for insiders. They cannot sell their shares immediately. But once this ban ends, a lot of stocks could come into the market, creating selling pressure.
We saw something similar recently with another space-related stock, Rocket Lab Company (He rode). As excitement around SpaceX grows, many Rocket Lab insiders have been cashing in. So don’t be surprised if some SpaceX insiders eventually sell after their embargo period ends.
Reason #2: There is no basic data
This is one of the reasons I waited. The other reason is data.
After the company has been public for a year, I can calculate the reward-to-risk ratio. I can look at the alpha. I can study the standard deviation. And I can take four quarters of fundamentals to see if a stock fits my fundamental eight-factor model.
In other words, I can stop guessing. for me Stock grader The tool can give it a simple rating from A to F – which gives me and my followers a clear understanding of whether you should buy it or not.
This is important for SpaceX because it is a complex business. You have a launch job. You have Starlink. And you have other long-term projects that could eventually become very valuable – or not very valuable.
But as an investor, I want to know which part of the business is driving growth. This is one of the main reasons I’m willing to wait. For now, SpaceX’s future as a public company remains a matter of speculation. A year from now, we should have a much clearer picture.
Reason #3: The Elon Musk factor
I would also add that there is the Elon Musk factor.
I’m not here to dispute the man’s genius. Elon Musk helped reinvent the automobile industry. He helped relaunch America’s space ambitions. He built the world’s largest satellite Internet network. He turned around Tesla company (TSLA) to one of the most valuable companies on the planet.
This is an extraordinary record. But investors need to ask a very practical question:
Can you handle the volatility that comes with Elon Musk?
When you invest in a Musk-led company, you’re not just investing in the business. You also accept the market’s reaction to Elon Musk himself.
We’ve seen that with Tesla. A single Musk headline could move billions of dollars in market cap. His political comments, public fights, and unpredictable behavior have created additional volatility around the stock at various times.
This does not erase what Musk has accomplished. But it adds another layer of risk.
Smart move this summer
The reality is that there is still a huge amount of money flowing in. When I was on Maria Bartiromo’s show on Fox Business recently, she pointed out that there is about $7 trillion in cash on the sidelines.
Some of this money will naturally gravitate toward the market.
High-profile IPOs like SpaceX, Anthropic, and eventually OpenAI could help attract more of that money into stocks. This is bullish for Growth stocksIt tells me that investors still have a strong appetite for innovation.
But bullish doesn’t mean blind, people.
June is a strong seasonal month, thanks to Russell’s annual realignment. We should also have another great earnings reporting season starting in July. But as we entered August and the first half of September, we entered the weakest seasonal period for the market.
So, if we see withdrawals or fewer steps this summer, I wouldn’t be surprised.
Bottom line: This is still not a market where you can guess or ignore your risk tolerance. You have to know what you own. You have to know what you’re missing. You have to know when to be aggressive – and when to be cautious.
This is exactly why I sat down with him TradeSmith CEO Keith Kaplan Earlier this week.
During our Special eventwe discussed why today’s market reminds me of the late 1990s, why I think the AI boom still has a long way to go, and how a new AI-powered tool could help investors become more tactical as volatility increases this summer.
It works by taking my financial analysis, based on trillions of data points, and combining it with a new system with my friends at TradeSmith. Then you add a revolutionary new form of artificial intelligence, to give investors the best possible chance of making huge, fast gains.
We’re also sharing two stock picks – absolutely free.
If you missed it, you can watch the replay here.
I highly recommend you watch it as soon as possible.
sincerely,
Louis Navellier
Senior investment analyst, Investor location
