Avoid the SpaceX IPO? ‘The juice has been squeezed from this orange’
SpaceX has laid the groundwork to list its shares on a public exchange, but investors should think twice before scooping up the stock, Requisite Capital Management managing partner Bryn Talkington told CNBC’s ” Halftime Report ” on Monday. That’s because investors are unlikely to see robust returns from the aerospace manufacturer stock following its likely massive initial public offering, given that much of its value already appears to be “priced in,” according to Talkington. “This will IPO as one of the largest companies in the world, and so I think the juice has been squeezed from this orange,” Talkington said. SpaceX is aiming to debut in the public market around June at a potential valuation of $1.75 trillion, Bloomberg first reported , citing people familiar with the matter. The company confidentially filed for an IPO last week, but it has until at least 15 days before its road show to release a public filing. The Elon Musk-owned company is looking to raise as much as $75 billion , which would make its IPO roughly three times larger than the biggest public listing in the U.S. to date. Consider that Alibaba raised about $22 billion in its 2014 debut . But, an IPO of that size would likely mean smaller returns for retail investors, according to Talkington. “So much is priced in with a company that’s doing $16 billion in revenue at a $2 trillion market cap,” she said. “It just makes no sense to me.” Stephen Weiss, chief investment officer and managing partner of Short Hills Capital Partners, also called into question the value proposition of SpaceX’s IPO due to the company’s size. “How much return can you generate off a $2 trillion company,” Weiss told CNBC. “It’s got to go to $3 trillion… it’s ridiculous for one of the largest companies in the world on that revenue base.”
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