3 Stocks You'll Wish You Bought on This SpaceX Weekend Dip

Space X soared on its first day of trading in this historic IPO, but at the same time, the rest of the space sector all saw a significant loss on Friday. Is this the window investors have been waiting for? Joining us now to break down how investors should be playing the space economy come Monday are market beat analysts Chris Marotch and Thomas Hughes. Guys, thank you both for being here today. Again, historic day. We can't underscore how big of a deal this IPO was. It's broke records again historic level of valuation and we got to listen in as the opening bell today when Elon Musk uh helped to open the the NASDAQ. He had a lot to say about where this company is still headed in the future >> and that's what SpaceX is all about is to take the fiction out of science fiction and create an exciting inspiring future for everyone. >> Right. So we have a lot to cover in this video. We're going to talk about how investors should be thinking about investing in SpaceX come Monday and for the rest of the week, where the stock could be headed, but also some opportunities in the space sector and how a lot of these names that we've been talking about for the last month really moved on Friday and what that should mean for investors come Monday. So, we're going to get into all of that in a minute, but guys, first let's just talk about uh that opening bell moment when Elon gave his speech. They they were streaming from both places. They rang the the bell to the NASDAQ in both places this morning. What was your reaction to seeing that? >> I was watching Elon Musk speak right before uh the market open this morning, which was about two hours before the SpaceX actually started actively trading. It was a surprisingly emotional moment. I was I was proud of it. I'm sure there's going to be a lot of critics. I'm sure there's going to be a lot of skeptics, but I think today is just a day for the optimists and the bull case. I mean, this is this is a great day. It's it's a great day for a great company and the possibilities that exist with this company are remarkable and I think the enthusiasm that you saw going into the IPO, it's just staggering and it's a good day, >> right? That's what we heard a lot when we were uh listening to Elon's speech today. And not only Elon, also the the the first woman who spoke, I believe she was the chief of operations speaking in in New York talking about how they've done the impossible many times over. They've made history many times over. They've done lots of things that people said that they couldn't do and they made it happen. So, let's talk Thomas really quick about what happened with the trading action when it first went live today. When did this stock actually go live and start trading? >> Well, it started trading a little bit before noon. So, the early indication was they were going to open around 165, but I think they pulled that back and the first trade was right around 150. It seemed like a pretty a pretty strong open. went all the way up to about 175 and that was around 1:00 115 and then you saw for the rest of the afternoon you saw it kind of drift downward a little bit. It closed at 160 116 but one thing that I noticed was that right around 3:45 I would say there's a pretty significant green candle. So buyers really stepped in at the end and then it looked like maybe some sellers got in there at the close, but so there was there was some significant uh tension right at the close between people who wanted to be long for the weekend and people who maybe wanted to take some profits. >> All right. Well, let's talk a little bit more about how big of a deal this IPO is. $75 billion is what they're looking to raise with this IPO. Uh let's talk about historically how that compares. I did a little research yesterday for a short that we did and it's wild. I think the stat that I saw is of the current record holder of the largest IPO. This is two and a half almost three times the size of what is currently the largest IPO record in history. Is that right? >> Yeah. What I found in my researching was it is a record raise. The initial valuation is kind of nutty too. Initial valuations 94 times uh earnings. Uh and the company is only profitable in a few of its segments. >> Uh let's talk about that that valuation. And that's the thing that everybody was talking about when they announced this IPO and they gave, you know, SpaceX, Elon gave their estimate of how much this company should be valued at and that 1.75 trillion number was thrown around a little bit. Let's talk about what you think about that valuation versus how much this IPO is for. Again, the IPO 75 billion, but that total valuation of the company, let's talk about that and and where you both stand on on whether that's relevant or not. >> Well, it's a huge valuation. It's way more than what the company's making, but it's also pretty small in comparison to what they think that they're going to be worth in time. I mean, the 28.5 trillion addressable market is a pretty pretty fair uh jump from where we are now. That's assuming like a 14, 12x, 13x increase from where we are now. Uh so that's a lot of work they have to do to to uh to to realize that valuation and even the near-term valuation. So, this really is going to be kind of a wait andsee stock and see how uh the commercialization of space uh takes hold over the the next few quarters and years. So, >> Chris, how about you? Where do you stand on the SpaceX valuation? Do you think that there is validity to the number that uh Musk has attributed to what this company is worth? And where do you think that XAI roll in plays into that valuation? >> My short answer, Bridget, is it's probably not worth the valuation it's at right now. But again, I'm I'm throwing any I'm throwing any skepticism aside today. Today's the day for the bulls. Today's the day for the optimism. Stocks trade on stories and this is a great story and they're buying the story right now. Some of it sounds fantastical. Some of it sounds like it'll never happen. But you know what? There's a lot of things that we didn't think were going to happen when SpaceX started as a company that are actually happening now. So, you know, today's a day for the optimism and the valuation will figure itself out. >> Let's take a look at a little bit more about what is happening in the rest of the market. I know Chris, one thing we had talked about is whether or not uh people were selling, you know, their other big holdings in tech that had had those huge gains and selling money to have capital ready for today. Are we seeing that play out yet in the market? And and do you think that could play out later on over the next few days of of open trade? >> You know, it could. I think I think if the people were going to do it, I think they've probably largely already done it. I think the price action today. I think some of it is is based on shifting gears a little bit. It's based on the the potential of a PCL. Oil's down today, but I see some of the big oil stocks are up. By and large, you're you're seeing a little bit of hit and miss in the market, but it seems to be generally bullish. >> As far as volume goes, it seems like there's quite a bit of volume uh throughout the day at different times on Space X. But what did that mean for the rest of the market as far as volume on on other stocks in the market today? Well, I think you generally saw volume was lighter in other stocks and that's because again everybody that wanted to get in on SpaceX was not getting in on other stocks and uh I think you saw that in some of the Mag 7 names and you also saw that in some of the other uh SpaceX adjacent names in the space sector that have been getting a lot of love in the last month or so, but not so much in the last week. >> I mean, generally speaking, the market is just kind of like an average day in the market. Um, I wouldn't think that SpaceX would necessarily trigger any other sectors or industries. What I'm mostly seeing though is a lot of weakness in space stocks generally. Um, and not because space is weak, but I just think that investors that would be spending money on space stocks today are doing it on SpaceX. And that's just an absence of buyers. So, right now, you know, Rocket Labs down about 7%. But I think that that's just a response to SpaceX. There's just there's nobody in in Rocket Lab's market right now because they're all they're all focused on SpaceX. But looking at Rocket Labs chart, you know, we've got an accelerating rally. We've got volume rising. We've got MACD converging with the rally. So to me, Rocket Labs market is getting stronger, you know, by the quarter. Uh the pullback that we see in the stock price right now would be a buying opportunity. >> Is this a long-term growth story? And is there a direct tie-in connection to SpaceX or are these guys kind of competitors? I know Rocket Lab is all about the launches and so is SpaceX. Are they tied together in any way or are they really competitors? >> Well, they're competitors because Rocket Lab is also a lip company making launches, making rockets. It's advancing its technology. Uh the story today that's driving the price action and and the uptrend is um accelerating launches and accelerating revenue. Um it's growing revenue. It's on a path to profits. It should hit adjusted profits within a few years. right now. Uh the story coming out of Q1 report was that uh the contracted launches are already greater than all the ones from the previous year. So that's really an exponential increase in in business. Uh so we're just looking for for revenue to to be growing, you know, pretty significantly over the next few years. Looking at a high double digit growth pace. This company is expected to um at least grow by 10x over the next 10 years. Uh which puts that valuation into some in real perspective. Uh right now it's trading at like 72 times sales but only six times the forward outlook as far as earnings go. I mean really like in in the low single digits almost at like pennies on the dollar compared to the long-term outlook. So this is just another one of those stories about execution. It's not that the business isn't isn't there needs to be created. The business is there. We just need to like continue building the rockets and building the business which demand shows is happening. So this is just a time story. Over time, the company is going to advance strategy, advanced technology, accelerate its launches as it is doing, and uh continue to grow its business. >> Yeah. Talking about uh Rocket Lab as one of those space stocks that's down. I know Redwire was also down this week. Chris, let's let's take a look at Redwire. I know that that stock had been up quite a bit. It had been doing so well. We saw tremendous performance for Red Wire and now it's pulling back almost to to to eat up all of those gains that it had gotten. So, let's get to that stock. Why do you think we're seeing so much back and forth movement with Redwire, Chris? >> You know, I I think this is a healthy pullback. I think this might have been investors who were in Redwire who are maybe pivoting and taking some of their profits and putting it into a stock like SpaceX. We don't know. Uh but when you have a stock that was up that much, it's due to pull back a little bit. I'm not necessarily going to freak out about it. >> Yeah, this is one of those names that again, we saw a ton of growth. Listen, I think that the argument here for Redwire is that this company is supposed to touch every area of the space economy. So, yes, they work with SpaceX. There's a few analyst estimates on Redwire that are are pretty high. Um, some of the price targets are moving higher. We've got some in the 20s, $22, which would be a nice uptick from where it is right now. Obviously, we had that all-time high for um Redwire in the past at uh hitting that 26 range. Do you think that we could see that come back for Redwire again anytime? There was a share dilution earlier this week. I don't know if either of you wrote on that. Do you think this one has long-term potential? >> There's a couple of things that I that come to mind when I look at this right away, Bridget. And the first thing that comes to mind is that the the announcement is for up to $500 million in shares, which you know there's a lot of uh there's the tendency to say they see at the market offering for $500 million and the presumption is that Redwire's using all $500 million right now. That's apparently not the case. It's just the fact that they've authorized it that they can use up to $500 million if they need it. So, you know, there might be a little bit of an overreaction going on there. This is one of those times when you have to come back and say this is a company that's not profitable. It hasn't been profitable and it's it's generating nice revenue. Revenue is expanding year-over-year. It's it's growing very nicely, but again, this isn't a profitable company. Share dilutions like this happen. I think the question investors have to be looking at is to say, is the company going to be using all 500 million of that? I don't know. Um, without knowing that, I think this is this this reaction is is a knee-jerk reaction to saying, "Okay, maybe maybe the stock's gotten a little bit too hot and it needs to come down a little bit." >> I think that's a good look at Red Wire for sure. All right, now we're on to another topic that I've been waiting to get to, and that is what is Tesla doing today. Um, so many people have talked about the connection between SpaceX and Tesla, and that eventually these companies could all be just under Elon's empire and could all be one thing. I don't know if we want to debate that today or not, if that's a potential in the future, but just looking at this nice little pop that it's seen. I think it was down to start the day of trading. It was down a little bit and now it's it's rallying back up again. Uh let's talk about are you surprised to see any kind of connection with this Tesla move today? Did you expect to see Tesla stock also move today? Well, Tesla is a proxy for SpaceX because it has some exposure to the company, but there's also the story that you've mentioned about Elon combining them, and I think that's probably the long-term goal. He likes to be in control, and he's got a goal, and that's getting to Mars, uh, the stepping stone is going to the moon. Uh, when he gets to the moon, when he gets to Mars, he's going to need electric vehicles to get around. I think Tesla will be and robots and other technology. So, I think Tesla's critical to that. But then his other company, the Boring Company, you know, makes tunnels. I think that company is going to be critical for for building, you know, lunar stations and Mars stations. So, I think eventually what we will see is just all of his companies coming together under under one umbrella. >> But what I want to talk about is is today a good a good shopping opportunity for some of these space stocks that are pulling back today because everybody's excited about SpaceX. For you, would this be a good shopping day for the retail community to look at some of these other names? Do you think that they might see rotation back and see a spike up back into these names maybe next week or a couple of weeks down the road? >> Oh, I think that it is a good a good entry point. Um as in particular, you look at the chart, it's choppy. It's got volatility. Uh but it comes down to the moving average where it is right now tends to find support and then it rebounds fairly quickly. So, it looks like it is a, you know, a textbook trend following entry in this stock. As far as the long-term outlook goes, this one, like the other space stocks, are all ramping their revenue, all trying to grow into these robust outlooks. It's just a matter of execution. Uh, so there's going to be volatility, but I think the trends are in place for these stocks to continue rising. >> All these space stocks outside of SpaceX are trading down right now. They're down today. Thomas, let's start with you. What's your take on what these kind of stocks are going to do uh over the weekend and to trade next week? >> Well, I mean, they could certainly pull back further. Looking at Planet Labs, the pullback is pretty substantial. So, it could take a little bit of time for the market to regain traction. Uh, but they've also pulled back to some critical moving averages. So, it looks like uh they pulled back to pretty solid support. I would think any additional downside would be fairly limited. Um, I would be looking uh for the stocks to be showing some buy signals at or near the current levels. Um, maybe in tandem with upcoming earnings releases uh but certainly by the end of the year. >> Yeah. Chris, how about for you? Do you think that they're uh especially next week? What's your prediction for what could happen with some of these smaller space stocks uh next week and even the next couple of weeks? >> You know, I don't think anything changes for the business case that any of these space stocks have. I think one thing that a lot of investors in this space have to understand is that if you're investing in companies that are on the way to profitability, let's just say that, and the stock is going to be volatile and and pull back 20% or shoot up 20% in, in a certain period of time, that's not a problem with the company. That may be a problem with your expectations of the company. Some of the stocks that are pulling back are pulling back off of, you know, gains of over a 100% or more in the last year. And that's just that's just not sustainable for companies that are basically posting no earnings. People could say the same of SpaceX. But at the same time, let's give that time to breathe. As I said before, Bridget, today is not a day for bearishness on SpaceX. Today is a day of bullishness and optimism. What SpaceX is accomplishing is a great thing. and let's just leave it at that. But for some of these other stocks, I don't think the bullcase is done. I just think that some of the stocks got overheated and having a stock like SpaceX available to buy now takes a little bit of the shine off of them. If you're looking to buy these stocks for the long haul, now might be a really attractive time to start accumulating again. All right, when it comes to SpaceX and what investors should be ready for come Monday, given how the stock closed today and how it performed throughout the day and really held the gains it saw early on, what does that tell you as far as what to expect Monday morning and the rest of next week? Or are we still in the case of who knows, it could go any direction from here? >> I'm going to say I'm still in the camp of the who knows, it could go in any direction. But one thing that I want investors to consider is the way the um the terms of the IPO were written. SpaceX will become part of the NASDAQ 100 I believe after the first five trading days. So by like next Friday or maybe the Monday after that it's going to be trading as part of the NASDAQ 100 which means there are certain funds that are going to have to start buying SpaceX if they haven't already. So, I think there's going to be a nice little bullish tailwind for SpaceX in the short term before we start getting into some of those messy parts of the lockup periods. >> All right, very good. Thank you both so much for your time today. As always, happy investing.