SpaceX Stock Volatility: What to Expect

Investors who bought into SpaceX’s IPO have experienced a wild ride, with the stock opening at $150 and climbing to $192.50 within its first few trading days. However, the stock has since returned to earth, and investors are left wondering what to do next.

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Wealth advisory Alliance Bernstein has tracked the performance of IPOs that raised $50 million or more over the past 10 years, finding that six months following the lockup, the median return was a 10% decline. While some stocks may recover, they often fail to revisit their initial IPO heights.

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With this in mind, investors should have a plan in place for three possible stock scenarios: if SpaceX stock soars, stalls, or crashes.

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**If SpaceX Stock Soars:** Every investor’s dream is to see their stock soar, but it’s essential to have a plan in place to take some profits along the way in a tax-efficient manner. Investors should also ensure that their SPCX holdings don’t overwhelm their overall investment portfolio, considering rebalancing holdings regularly to maintain a comfortable SpaceX exposure.

**If SpaceX Stock Stalls:** If the stock hits a price ceiling and stays there, investors should consider sticking with it if they believe in the company’s vision for space exploration. However, if the stock doesn’t move, it’s essential to reassess and consider other investment opportunities.

**If SpaceX Stock Crashes:** This is the real test of an investor’s mettle. To prepare, investors should avoid panic selling and have a strategy in place. Options for investors include using stop-loss or trailing stop orders to maintain a profit, buying the dip, and making sure the rest of their portfolio is well-positioned.

Additionally, investors should consider selling a portion of their SPCX holdings to offset taxable gains elsewhere in their portfolio. Using options can also provide a profit cushion during SpaceX price swings, but it’s essential to learn more about options trading before employing this strategy.

**Other Considerations:** Investors should also be aware of the lockup expirations for insiders who hold pre-IPO SpaceX shares, as well as the possibility of a merger with Tesla or other opportunities that may dilute shares. Tax implications should also be considered when deciding whether to sell.

In conclusion, investing in SpaceX stock requires a solid plan and a willingness to adapt to changing market conditions. By understanding the potential risks and rewards, investors can make informed decisions and achieve their long-term financial goals.

Plan for Three Possible Stock Scenarios

• If SpaceX Stock Soars: Take some profits along the way in a tax-efficient manner, ensure SPCX doesn’t overwhelm your portfolio, and rebalance holdings regularly.
• If SpaceX Stock Stalls: Stick with it if you believe in the company’s vision, but reassess and consider other investment opportunities if it doesn’t move.
• If SpaceX Stock Crashes: Avoid panic selling, use stop-loss or trailing stop orders, buy the dip, and make sure the rest of your portfolio is well-positioned.