Following the previous post, let's talk about the hidden demand
As we explained in the previous post, SpaceX's stock offering injects about $75 billion worth of stock supply into the market with the possibility of raising up to $86 billion
When examining the early demand data for the stock, a very, very serious liquidity problem is revealed. Institutional demand for SpaceX shares completely exploded
According to recent reports we received, BlackRock alone placed an order for $5 billion worth of shares!
Sovereign funds from the Gulf placed orders worth billions of dollars.
Billionaire Ron Baron alone placed an order for $1 billion
He states that he has no plans to sell these shares during his lifetime
According to him, the company's market cap could grow to $20 trillion within about 10-15 years, as he believes Starlink alone will reach $1 trillion in annual revenue.
According to the most updated reports, total institutional demand for the shares was more than 4 times and exceeded $300 billion in orders
The institutional stock supply is about $60 billion
This means we are talking about approximately $250 billion in unmet demand!
Retail investors too (we, you, and all other private investors) are deeply involved in this story
Demand from private investors exceeded $100 billion. The total supply available to private investors is only $10 billion
This means there is approximately $90 billion in unmet demand.
The total unmet demand for shares is around $350 billion.
These funds may try to buy the stock after the offering
Let's be conservative and assume post-offering demand of only 50% of the demand funds
And conservatively, let's assume most early buyers will sell their shares during the first trading days
We are still talking about approximately $170 billion in demand versus approximately $70 billion in supply
Mathematically, demand is dramatically above supply, which could greatly affect stock volatility
And this is before we even got to the Nasdaq issue: In 15 days from today, SpaceX is expected to be approved for the Nasdaq index, which is expected to attract an additional estimated demand of about $8 billion immediately after approval.
The demand here is enormous, volatility is also expected to be enormous, and if the price soars, early buyers are expected to take profits, which will further increase volatility.
The key here is the opening of the insider selling mechanism
We will elaborate on it in a separate post later
It is expected to release a huge amount of supply to the market in the coming months
And institutional investors sitting on enormous profits of tens and hundreds of billions of dollars are expected to release supply to the market
which may affect the stock price later.