SpaceX IPO: K-Shaped Market Dynamics and Investment Risks

Disclaimer: This article is intended purely for discussion purposes and does not constitute investment advice. It should not be regarded as a recommendation to invest in any asset. All investments involve risk. Any investment decisions made by readers are entirely their own responsibility and are unrelated to this website or the author.

How High Could the SpaceX IPO Price Go?

The IPO price, the level at which institutional investors choose to push the stock before distributing their holdings, and whether retail investors are willing to absorb those shares will ultimately determine how the long-term narrative of the company develops. SpaceX is an exceptionally large company with an equally ambitious narrative surrounding it, including AI computing infrastructure, satellite communications, nuclear fusion power generation, and even military applications. In the article Predictions About U.S. Treasuries and SpaceX, I pointed out that the SpaceX IPO would play an important role in the broader process of debt restructuring. Events have unfolded much as expected. Ahead of the SpaceX IPO, U.S. dollar liquidity was drawn back aggressively, while Japan, South Korea, Indonesia, and Vietnam all experienced simultaneous declines in both their equity and currency markets. Meanwhile, the Nasdaq continued to fall because investors and institutions only had limited liquidity available. To subscribe to SpaceX shares, they first had to sell part of their existing portfolios.

pic1: SpaceX IPO Price

The IPO initially offered US$75 billion worth of shares, yet total subscriptions reached a record-breaking US$280 billion. Whether institutions choose to sell after the listing, hold their positions firmly, or actively manage the market will determine whether SpaceX becomes another PvP-style project similar to many Crypto issuers, or whether it evolves into one of the foundational pillars of economic development for decades to come. Finance is a battlefield without visible bloodshed—or perhaps “silent slaughter” is an even more accurate description. The narrative surrounding an asset is often a misconception held by retail investors.

After the IPO, SpaceX’s share price climbed only 16.6% before institutions began distributing their positions, eventually closing with a long upper shadow around the US$160 level.

1. The widely promoted narrative of the IPO being four times oversubscribed was deliberately released by institutional investors to attract buyers willing to absorb their shares.
2. Retail investors did buy in, but overall market liquidity was simply too weak to support large-scale distribution. If institutions intended to unload all of their holdings, the cost of pushing prices higher would become extremely expensive. The real issue was not whether retail investors wanted to buy—it was that they simply lacked enough capital to absorb the supply.

As a result, the market narrative itself also becomes K-shaped, further intensifying the K-shaped distribution of wealth and market participation.

The Narrative Around Any Asset Is a Retail Misconception

Every investment in the secondary market can essentially be viewed as trading a shell. During the Crypto era, markets were smaller, moved much faster, and operated around the clock, making Crypto an amplified version of the traditional stock market. Once you understand how newly listed tokens are launched on centralized exchanges (CEXs) such as Binance, you’ll notice that the SpaceX IPO follows almost exactly the same pattern:

Allocation of shares → Narrative promotion → Public listing → Rotation of ownership to new buyers.

A publicly issued secondary-market offering is, by its very nature, built upon expectations. I’ve never fully understood the valuation models taught in MBA programs for pricing IPOs. Most of them simply imitate existing frameworks to estimate market capitalization. Eventually I realized something much simpler: market capitalization is determined by what the current buyer believes the company is worth, and whether the next buyer is bullish or bearish.

For example, imagine a company owns US$1 million worth of assets. Using a depreciation model, those assets lose 50% of their value each year, leaving them worth US$500,000 after one year. To merely offset that depreciation, the company would need to generate at least US$500,000 in profit. In reality, it would need to earn closer to US$1 million annually to maintain a balanced level of risk.

From an accounting perspective, debt financing carries the highest explicit cost because interest payments are mandatory. Issuing stock appears to have the lowest explicit cost because dividends depend on profitability. Therefore, if someone already has substantial capital, lending money often becomes the optimal strategy.

This is also the underlying logic behind Warren Buffett’s investment philosophy. When Buffett buys a company, he is, in essence, lending capital to that business while reducing the risk of management manipulating shareholder returns through dividend policies. More importantly, this approach avoids many financial traps that ordinary investors struggle to identify—much like the hidden clauses buried inside insurance contracts or the familiar phrase, “The company reserves the final right of interpretation.”

The fundamental logic behind most retail investing has never changed, and therefore the outcome rarely changes either. Whether a retail investor copies the trades of Duan Yongping or Warren Buffett, the ending is often the same. The timing is different. The information available to them is different. The perspective behind their decisions is never fully disclosed. No investment theory is universally applicable.

Someone accustomed to operating in the private market will often fail repeatedly if they apply exactly the same methods in the public market. Likewise, a trader who made a fortune exploiting short-term arbitrage opportunities—such as shorting and longing during the Luna death spiral—would likely become one of the largest victims if they approached AI stocks like SpaceX with the same mindset.

Understanding who you are and identifying your own competitive advantage in making money is the true foundation of successful investing.

There is nothing particularly mysterious about investing, nor is there any magical Wall Street myth that “quantitative trading robots make unlimited money.” Before anything else, a person must first understand who they are and choose a path that matches their own strengths, rather than forcing themselves onto one that is fundamentally unsuitable.

One of the biggest flaws in modern education is that it claims to teach according to individual ability while continuing to function as an examination-oriented system. Its real objective is to produce graduates who can be employed by companies—in other words, education primarily serves businesses rather than individuals. Personally, I believe education should be freely accessible. I’ve never understood why something so fundamental has become something people are expected to pay for.

This entire system has been profoundly challenged by the emergence of AI. Training an AI developer is dramatically cheaper than training a human developer.

—Of course, AI itself has every reason to stay quiet about this point. Otherwise, fewer people would buy into the narrative, and stock prices might collapse.

K-Shaped Narratives Triggered by SpaceX

SpaceX closed yesterday at US$160 per share, giving it a market capitalization of more than US$2 trillion. Following the logic discussed above, SpaceX would theoretically need to generate US$2 trillion in annual profits—yes, profits—to maintain a balanced level of asset risk.

Of course, many people will immediately argue that this calculation is wrong. They’ll pull out financial statements and traditional valuation models to explain why. This is precisely why, when investing collides with human nature, risk is no longer perceived as risk. Everything becomes “opportunity.” Everything becomes “an algorithm.” When risk finally materializes, it is simply blamed on “the bubble.”

But who created the bubble?

K-Shaped Scenario A: Explosive growth in U.S. GDP. MAGA!

K-Shaped Scenario B: A bubble. In Japanese: BAGA!

The key point is that the bubble has not burst yet. Positive external narratives—such as the claim that the United States and Iran are “about to reach an agreement”—provide institutions and major market participants with endless news headlines that can be used to justify further price appreciation. By comparison, the bearish narrative has only one story to tell.

As a result, retail investors spend 99% of the time being conditioned into becoming exit liquidity, while only 1% of the time recognizing the underlying risks. There is a famous Chinese idiom, “Three people make a tiger,” which means that if the same message is repeated often enough, people eventually accept it as truth.

When it comes to forecasting or analyzing the scripts created by the flow of time, AI systems naturally emphasize the 99% narrative while downplaying the remaining 1% of risk. On one hand, this saves enormous amounts of computing power because the dominant market narrative already exists everywhere and can simply be reproduced instead of recalculated. On the other hand, even if AI identifies that 1% probability of extreme risk, developers may deliberately soften or filter those responses to reduce potential legal liabilities.

The result is that retail investors eventually decide to buy the dip or chase higher prices because of “the narrative.” This is virtually identical to the PvP environment that repeatedly appears whenever newly issued Crypto tokens begin trading on centralized exchanges.

Ironically, many people simply refuse to admit that they are the ones being eliminated in that PvP game—that they are retail participants in the secondary market—while continuing to dream that one day they will board Starship and fly to Mars.

Disclaimer: This article does not express either a bullish or bearish view on SpaceX, nor does it predict the collapse of any country’s stock market. How readers choose to interpret the content is entirely their own responsibility.

Anthropic and OpenAI IPOs

The reason I continue comparing AI IPOs with Crypto listings on centralized exchanges is simple: the mechanics behind them are remarkably similar.

Anthropic and OpenAI are expected to pursue IPOs around October or November, roughly three months after the market has absorbed the SpaceX shares. That would introduce yet another wave of trillion-dollar-scale public offerings.

Investors who failed to obtain allocations in the SpaceX IPO will likely compete aggressively for shares in these two AI companies.

The assumption behind this narrative, however, is that the market possesses unlimited liquidity and unlimited buying power.

Otherwise, how could the world possibly support investment narratives of such extraordinary scale?

Yes—the entire world.

Don’t forget what already happened before the SpaceX IPO: stock markets and currencies in Japan, South Korea, Indonesia, and Vietnam all came under heavy pressure simultaneously.

The rest of the analysis is left to the reader.

For various reasons, I will not continue extending this line of reasoning here.

The risk warning has already been presented.

How you choose to act from this point forward is entirely your own decision.