Buying Every Share NOW of SPACEX 🚨 IT IS NOT DONE ‼️

Key Concepts

• Inclusion Day: The date when a stock is officially added to an index (e.g., NASDAQ 100), triggering mandatory buying from passive ETFs.
• Market on Close (MOC) Order: A trade executed at the very last second of the trading day to ensure the ETF matches the index's closing price.
• Lock-up Period Expiration: A period following an IPO where early investors and employees are restricted from selling shares; once expired, the influx of shares often creates downward price pressure.
• Confidence Interval: A statistical range (95% in this analysis) within which the stock price is expected to fall based on current data.
• Sell-to-Cover Transaction: A mechanism where employees sell a portion of their newly vested shares immediately to cover tax liabilities.
• Arbitrage: The practice of buying shares early to sell them to institutional buyers (ETFs) at the closing price on Inclusion Day.

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1. SpaceX Inclusion and Market Mechanics

The video highlights the upcoming inclusion of SpaceX into the NASDAQ 100 (scheduled for July 6th). A critical distinction is made between the official inclusion date and the actual buying date:

• The Mechanism: Passive ETFs must replicate the index precisely to minimize "tracking error." To do this, they execute Market on Close (MOC) orders on the trading day prior to inclusion (July 2nd).
• The Process: At 3:59:59 PM, the NASDAQ closing cross aggregates all MOC buy orders from ETFs and matches them against sell orders in a fraction of a second.
• Institutional Strategy: Institutions and market makers anticipate this demand by accumulating shares weeks in advance, then acting as the "structural counterparty" to sell those shares to the ETFs at the closing cross.

2. Lock-up Period and Downward Pressure

The speaker emphasizes that the long-term price trajectory is heavily influenced by the expiration of lock-up periods:

• Timeline: The first major expiration occurs two trading days after the quarterly earnings (expected around August 11th), releasing 30% of locked shares.
• Cumulative Impact: By mid-November, approximately 93% of locked shares will be eligible for sale.
• Employee Selling: Many early employees hold significant concentration risk (90%+ of net worth in shares) and are expected to sell to achieve financial freedom or cover tax liabilities via "sell-to-cover" transactions.
• Historical Context: The speaker notes that 90% of IPOs trade below their IPO price within 12 months due to this supply-side pressure.

3. Price Prediction and Statistical Analysis

Using a 95% confidence interval, the speaker provides a quantitative outlook for the stock leading up to the July 2nd inclusion:

• July 1st Prediction: Expected range of $176 – $280, with a mean of $228.
• July 2nd Prediction: Expected range of $180 – $290, with a mean of $235.
• Risk/Reward Ratio: The speaker identifies a roughly 3:1 risk-reward ratio. By utilizing a 2x leveraged position, the speaker calculates a potential 14% downside risk against a 40% upside target, based on the expected mean price.

4. Strategic Outlook and Conclusion

• Short-Term: The speaker is currently long on SpaceX, anticipating institutional buying to push the price higher leading into the July 2nd MOC event.
• Post-Inclusion: The speaker warns that after July 6th, the institutional buying pressure will vanish, likely leading to a downward trend exacerbated by the lock-up expirations.
• Long-Term: Despite the expected volatility and downward pressure through late 2024, the speaker remains fundamentally bullish on SpaceX’s long-term potential in space infrastructure, AI, and compute, planning to begin a dollar-cost averaging (DCA) strategy in December.

Notable Quote: "The institutions are the ones selling into the ETFs, not us... I don't want you to be the bag holder."

Synthesis: The primary takeaway is that retail investors often misunderstand the timing of index inclusion. While the "Inclusion Day" creates a temporary price floor and upward momentum due to mandatory ETF buying, the subsequent months are likely to see significant downward pressure due to the massive release of locked-up shares. The speaker advises trading the "Inclusion Day" event specifically while preparing for a long-term accumulation phase starting in December.