Now is the time to start thinking about whether or not SpaceX’s stock might be a good long-term holding.
Investors who were unable to buy shares of SpaceX at the initial public offering price of $135 might still be looking for an opportunity to jump on the bandwagon.
Another of Elon Musk’s companies, Tesla, provides an example of a hyped-up IPO that initiated a scramble for shares. That stock’s IPO price was $17 on June 29, 2010, and the shares rose 41% that first day of trading. If you had missed out on the IPO and gone in at that first day’s closing price of $23.89, and then held the stock for a year, your gain would have been 18%, trailing the 12-month total return (with dividends reinvested) of 28% for the S&P 500, according to FactSet.
If you had held Tesla for two years after buying at the close on June 29, 2010, your gain would have been 31%, still trailing the S&P 500’s return of 36%. But if you had held it for five years, your Tesla gain would have been 997%, against a 120% return for the S&P 500.
So what about SpaceX? If you tried to buy in at the IPO price of $135, chances are you were unable to participate. The offering was oversubscribed. The stock rose 19.2% on Friday to close at $160.95.
In an email Friday morning before SpaceX’s stock began trading, Nancy Tengler, CEO of Laffer Tengler Investments in Nashville, Tenn., shared her opinion that the appropriate analogy for SpaceX as a public company was Amazon. “This was a company that changed the way we live,” she wrote. “The question becomes: what’s your time horizon, and do you believe in the technology?”
“Our time horizon is three, five, seven, even ten years,” Tengler wrote. If SpaceX’s stock were to decline quickly from the IPO price of $135 to $100, “it wouldn’t change our long-term view. We want to participate.”
In another email to MarketWatch, Nicholas Anderson, a portfolio manager at Thornburg Investment Management in Santa Fe., N.M., emphasized SpaceX’s potential as a provider of artificial-intelligence computing capacity. In its updated IPO filing, SpaceX disclosed new contracts with Anthropic and Google that could bring in $26 billion in revenue annually.
“That’s more than double Starlink’s entire 2025 revenue. If margins resemble those of publicly traded AI infrastructure providers, [graphics processing unit] leasing is already SpaceX’s highest-margin business,” Anderson wrote.
There is still plenty of excess capacity at SpaceX unit xAI’s Colossus 1 facility in Memphis, Tenn., beyond what will be used to service the new Anthropic and Google contracts, according to Anderson. “AI compute remains so severely supply-constrained that SpaceX’s terrestrial data center business may be generating better returns than everything the company has spent the last 26 years building,” he added.
