SpaceX Stock Could Soar to $5 Trillion on IPO Day, According to a Wall Street Expert
Written by Trevor Jennewine for The Motley Fool -> Jim Cramer thinks SpaceX stock could jump 180% on its first trading day due to high demand and a small amount of available shares. SpaceX's goal of raising $75 billion from its IPO means institutional investors (currently sitti
Jim Cramer thinks SpaceX stock could jump 180% on its first trading day due to high demand and a small amount of available shares.
SpaceX's goal of raising $75 billion from its IPO means institutional investors (currently sitting on low cash levels) will have to sell other stocks to participate.
Morningstar analysts value SpaceX at $780 billion, a 56% decline from its IPO market value of $1.77 trillion.
SpaceX's initial public offering (IPO) is scheduled for Friday, June 12. The company will list its stock on the Nasdaq exchange under the ticker SPCX. It will be priced at $135 per share, giving SpaceX an initial market capitalization of $1.77 trillion. But that figure could be much larger by the time the market closes.
Institutional and retail investors are ravenous to own a stake in Elon Musk's company. In fact, demand is so great that CNBC's Jim Cramer -- a former hedge fund manager who earned returns of 24% annually over 14 years -- says SpaceX could "end up with a $5 trillion valuation on the day it comes public." That implies about 180% upside from its IPO price.
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However, Cramer also thinks the SpaceX IPO could be destructive for the rest of the stock market. Investors who want to participate may have to raise money by selling other stocks, and Cramer sees prime targets in Amazon , Microsoft , and Nvidia , three companies that account for nearly 17% of the S&P 500 (SNPINDEX: ^GSPC) .
SpaceX hopes to raise a record $75 billion from its IPO , roughly triple the previous record of $26 billion set by Saudi Aramco in 2019. That money needs to come from somewhere, and cash levels among institutional investors and high-net-worth individuals are near historic lows.
