SpaceX surpassed Amazon’s market value on Tuesday and briefly topped Microsoft’s, quickly climbing the list of the world’s most valuable companies on a tumultuous trading day fueled by frenzied action in the company’s newly listed options contracts.
SpaceX shares rose 11 percent to $213.16, giving Elon Musk’s company a market value of about $2.8 trillion — nearly $1 trillion more than it was worth when it sold its record initial public shares.
Show last week.
Shares rose as investors bet on Musk’s sprawling empire that spans from rockets to artificial intelligence, even though it carries a much larger valuation than other trillion-dollar giants on the U.S. stock market. The stock is expected to enjoy additional demand in the coming weeks as it joins the major indices.
“It’s a $2.5 trillion company, but it certainly looks like one of those meme stocks, the way it trades,” said Joe Saluzzi, co-head of equity trading at Themis Trading.
“We’ve seen momentum in the past; they tend to run away and you have to be very careful with these types of names.”
The main driver of Tuesday’s gains was the launch of options on SpaceX stock, which give the right, but not the obligation, to buy or sell shares at a certain price by a specific date. They are often used by traders seeking to profit from rising interest in a stock or betting that a stock will rise or fall quickly.
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More than 500,000 SpaceX options contracts were traded during the first hour of trading and more than 1 million by early afternoon, according to Trade Alert data. SpaceX’s extremely bullish options trading volume likely helped lift the stock early in the session, said Brent Kochoba, founder of options analytics service SpotGamma.
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High options volume can sometimes cause the underlying stock to fluctuate as well with options traders, who facilitate the trade by taking the other side of the options trade, buying and selling the stock.
To settle their own risks.
“If you’re a market maker, you can’t hedge SpaceX with anything other than SpaceX,” he said.
Trading volume in SpaceX shares was enormous, with trading volume in SpaceX shares reflecting the approximate dollar value of the day’s trades, the highest among large US-listed companies at $52.
one billion.
The recent rise in SpaceX shares came on a day when technology stocks were falling, with the Semiconductor Index falling 3 percent and the Nasdaq Composite falling 0.5 percent. Among the losers were shares of options exchange CBOE Global Markets, which fell 8 percent, while rival CME Group fell 2 percent, the latest sign of investor concern about the rise of perpetual futures — contracts with no expiration date that enable traders to bet on price movements without owning stocks or other assets.
“It’s time to approve regulated futures contracts that don’t have an expiration date,” Michael Selig, head of the Commodity Futures Trading Commission, said Monday on CNBC. “We will make sure the product is available, but it is well regulated here in the United States.”
Terry Duffy, CEO of the Chicago Mercantile Exchange, warned this month that US regulators were creating systemic risk by allowing products such as perpetual bitcoin futures that typically carry large amounts of leverage.
On Tuesday, Miami International Holdings’ stock fell 9 percent, a move that William Blair analyst Jeff Schmidt said was driven by concerns about perpetuity that are “likely overvalued.”
Heavy trading, more volatility expected
Individual investors — who received about 20 percent of SpaceX’s IPO allocation — had bought a net $43.2 million worth of shares as of 10:10 a.m. EDT, based on more than $200 million in net purchases in the last two sessions, according to Vanda Research data.
Analysts and portfolio managers said investors should brace for volatility due to SpaceX’s relatively small float and high valuation.
The company reported sales of $18.67 billion last year and a net loss of $4.94 billion after its merger with loss-making xAI — unlike many of Wall Street’s big tech companies that posted big numbers. This puts its price-to-sales ratio at more than 150, compared to a 12-month price-to-revenue ratio of 20 for Nvidia, the largest US company by market capitalization.
On Tuesday, its market capitalization surpassed Amazon’s at $2.65 trillion, and briefly surpassed Microsoft’s value of $2.92 trillion. Next come Apple, Alphabet, and Nvidia, which have a market capitalization of more than $4 trillion.
The rally could continue, analysts said, as SpaceX prepares for an accelerated inclusion in the Nasdaq 100, which would soon make it a major holding of passive funds and ETFs that track the index, creating a new source of demand for its shares.
FTSE Russell and MSCI are also scheduled to add the stock to their indices from June 26 and June 29 respectively.
“While index inclusion alone is typically not enough to drive repricing sustainably, we see a combination of negative flows, momentum and limited float driving the upside beyond historical index addition moves,” brokerage Zephirin Group said, initiating coverage on the stock with a “buy” rating. SpaceX also said Monday that its underwriters exercised their “green shoe” option to purchase additional shares, increasing the total proceeds from its initial public offering to $85.7 billion from the $75 billion it raised last week.
Earlier today, SpaceX also said it would acquire software company Anysphere for $60 billion.
