The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Mag 8?
Premarket action was slightly bullish. Futures implied 20-40 points of upside for the S&P 500. Continuation of yesterday’s price action seemed in the cards. The S&P opened about +15 and wandered around a bit. Rumors of problems with a US/Iran agreement showed up and for a moment, investors thought here we go again. As markets calmed and more encouraging US/Iran headlines printed, attention shifted to the SpaceX IPO. SPCX printed its first trades in the secondary market around 11:50 AM and it went quite well. The stock popped 20-ish percent above its IPO prices and held up well. The success of that IPO resulted in a generally positive vibe across the broader market.
Much was, and will be, said about Elon Musk becoming the first trillionaire but that isn’t significant for our purposes. SPCX started its life as a publicly traded company with a $2 trillion valuation. That would make it the 5th largest company in the S&P 500, if it were included in the index. At some point SPCX will be added to the S&P 500 but for the moment it is not. In the meantime, SPCX might be an unofficial new addition to the Mag 7. It has the market cap. The question is whether it will have future eye-popping returns.
When it comes to discussing the leaders of the stock market, for the foreseeable future SpaceX is part of that group. As it gets added to various indices and ETFs, it will have direct effects on the market. Even before that, it will be part of the conversation. Investors will be watching how it trades and it will influence how other stocks, and the entire market, trades.
This is neither good nor bad. It’s important not to place a value judgement on the situation. It is just important to recognize that there’s a new megacap in town and whether it joins the Mag 7 and that group becomes the Mag 8, or not, it will be a company and a stock that requires our attention.
See you Monday, have a great weekend.
-Mike
Visdom Market Commentary
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