Original author: The Flow Horse
Compiled by: Peggy, BlockBeats
Editor's Note: Amidst the intertwining of mega-IPOs, AI narratives, and the repricing of risky assets, market discussions surrounding SpaceX's listing are shifting from "how much is this company actually worth" to "how will it be traded after its IPO." However, as SpaceX becomes one of the most watched technology assets, a more crucial question emerges: on the first day of trading for a new stock with no historical price, no mature option structure, and no clear share distribution, should investors understand it using a valuation framework or the market's microstructure?
This article is translated from The Flow Horse's video content on trading strategies for SpaceX's first day of IPO. The focus is not on discussing SpaceX's long-term fundamentals, but rather on breaking down the potential challenges it may face in the early stages of its listing, including cash flow, free float, index inclusion, and the timing of share lock-up expiration. The video's creator is a market trader who has long focused on IPOs and order flow trading; their perspective is closer to order book and trade execution than traditional company valuation analysis.
In this article, the SpaceX IPO is broken down into a set of more fundamental structural questions: it is not a simple "should I buy it?" question, but rather a process in which traders, retail investors, passive funds, and insiders repric around limited liquidity in different time windows.
First, retail investors are most prone to misjudging the trading environment on the first day of trading. In the past, when trading popular stocks, retail investors typically relied on trend lines, support and resistance levels, previous highs and lows, and opening momentum. However, on the first day of the SpaceX IPO, there were no historical charts, no areas of high trading volume, and no mature option structure. Before the first candlestick, the market had no reusable price memory. What truly determines the short-term direction now is the order book, trading volume, VWAP (Volume, Price, and Averaging Down), the opening range, and where genuine turnover occurs between buyers and sellers. This means that if retail investors chase the initial surge or prematurely use technical analysis to find so-called trends, they are likely to bear the highest risk before the structure has even formed.
Secondly, past hot IPOs do not support the notion that "an initial surge in price is inevitable." Coinbase, Airbnb, and ARM all garnered significant attention, but they didn't immediately establish a stable trend after their IPOs; instead, they experienced significant two-way fluctuations. In the past, the market tended to interpret hot IPOs as the realization of emotional consensus; now, a more accurate understanding is that they often become a place where short-term funds, profit-taking, and new buyers repeatedly change hands. This means that even with a strong narrative and high subscription rates, SpaceX's first week is not suitable for trend followers. Those truly suited for the first day of trading are traders who can quickly analyze order flow, control their positions, and accept two-way fluctuations.
Third, the initial trading strategy should shift from "predicting direction" to "waiting for structure." In the past, many traders were accustomed to setting bullish or bearish views before the market opened and then using the first price movement to verify their judgment. However, for a low-float IPO like SpaceX, it's even more crucial to let the market establish its structure first: Is there support around $135? Has the 5-minute opening range been effectively broken? Has the VWAP retracement held? Are there constantly updated hidden buying and selling forces in Level 2 data? The core of trading now is not to jump to conclusions before everyone else, but to determine who holds the initiative after the market generates its first set of price indicators. This means that the most important thing is not entering the market immediately, but avoiding being passively traded in the most chaotic, widest-spreading, and most emotionally charged positions.
Fourth, investors must understand that different phases are driven by different types of capital. In the first 15 trading days, SpaceX resembled a short-term trade dominated by low float, sentimental capital, and order flow. Around the 15th trading day, the anticipated inclusion in the Nasdaq index might trigger a second phase of price-insensitive buying. After the initial earnings report, the unlocking of supply began testing market absorption. Further down the line, the unlocking of shares by major shareholders after 70, 90, 120, 180 days, and a year later, will gradually provide more reliable long-term signals. In the past, IPOs were often seen as determining success or failure based on the first day's price movement; now, SpaceX is more like a series of continuous liquidity tests. This means that long-term judgments should not be based on first-day sentiment, but rather on whether prices can form a stable bottom after the new supply enters the market.
Fifth, the SpaceX transaction may not only involve SpaceX itself. Aerospace and space economy-related companies like Rocket Lab and LUNR may become "shadow stocks" reflecting the same theme during their IPOs. In the past, IPO transactions typically revolved around the primary target; now, when the primary target has a low float, high volatility, and wide price spreads, related assets may offer a clearer trading structure. This means the market is trading not just SpaceX stock, but also the industry narrative and liquidity spillover it has activated.
If we were to summarize this article into a single judgment: the first day of SpaceX's IPO belongs to traders, while long-term judgment depends on supply testing. For traders, the first day could be the "Super Bowl" of order flow trading; for investors, the price fluctuations on the first day should not be over-interpreted. In this sense, the core issue of SpaceX's IPO is not just whether or not to buy on the first day, but whether participants can first determine which game they are entering: look at order flow on the first day, and look at supply absorption capacity in the long term. Confusing these two aspects is precisely why most retail investors are most likely to lose money.
The following is the video content (the original content has been edited for easier reading and comprehension):
Why most retail investors likely lost money in the SpaceX IPO
The most dangerous thing about SpaceX's IPO on its first day is that many people will trade it like a regular hot stock.
Ordinary stocks have historical price ranges, previous highs and lows, areas of high trading volume, and ample market memory. Traders can refer to past support and resistance levels, moving averages, option positions, and cost of capital. However, the first day of an IPO is a blank chart. Before the first candlestick appears, the market has no real trading history.
This means that drawing trend lines too early is meaningless, and chasing the first wave of upward movement after the market opens is easily thwarted by adverse price movements. Especially in a low-float environment, prices may surge rapidly due to short-term buying pressure, or suddenly fall back due to profit-taking or institutional supply. Retail investors who only look at price increases and sentiment are likely to enter the market at the noisiest points.
The real trading logic on SpaceX's first day was the real-time formation of the auction mechanism (where buyers and sellers seek equilibrium at different prices). Traders needed to observe: Who was willing to bid higher? At what price levels were sellers continuously replenishing their positions? At which price levels were there a lot of trading but the price couldn't be pushed up? This order book information was more important than any pre-drawn technical patterns.
Transaction details: $75 billion in funding, 3% free float and high retail allocation
SpaceX's IPO plans to issue approximately 555 million shares, raising about $75 billion, priced at $135 per share, with an overall valuation of approximately $1.7 trillion. This scale alone is enough to make it a market-level event.
However, what truly determines the first day's volatility is not just the size of the financing, but the amount of shares in circulation. Only about 3% of SpaceX's shares are freely tradable in the initial public offering. This means that even moderate buying can significantly impact the price. Retail investors chasing the price higher, active funds building positions, and small-scale institutional purchases can all cause the price to deviate from fundamentals in the short term.
Another unique variable is the allocation to retail investors. The proportion allocated to retail investors this time may reach approximately 30%, roughly three to four times that of a typical IPO. This will make post-market trading more difficult to predict. On one hand, more retail investors acquiring shares in advance may reduce the urge to chase the price higher on the first day of trading if they cannot buy. On the other hand, these investors who acquired shares in advance may also take profits after the market opens, creating the first wave of supply.
Therefore, the core of SpaceX's IPO is not simply judging that "oversubscription is a good thing," but understanding the shareholding structure: extremely low free float will amplify both rises and falls, while high retail allocation may make both buying and selling more aggressive on the first day.
15th Trading Day: Nasdaq Index Inclusion May Change the Nature of Funds
Another key milestone is the 15th trading day after the IPO. According to the plan, SpaceX may be included in the Nasdaq 100 Index (NDX). This arrangement is still subject to final rules and actual results, but the underlying trading logic is very important.
In the early stages of listing, prices are primarily driven by quick money, retail investors, active funds, and sentiment-driven capital. These funds are price-sensitive and will quickly enter and exit based on fluctuations. However, after inclusion in the index, another type of capital will be introduced to the market: passive funds.
Passive funds are characterized by price-insensitive flow (meaning they must buy because of index rules or portfolio requirements, rather than because the price is cheap). Index funds, ETFs, and related tracking products are required to allocate constituent stocks according to rules, and this type of buying is often more mechanical and more easily traded in advance by the market.
Therefore, before the 15th trading day, active funds may attempt to front-run (i.e., buy in advance before certain buying pressure arrives). If SpaceX has already established upward momentum in the early stages of its listing, the mechanical buying brought about by index inclusion may further amplify the trend; however, if the performance is weak in the first two weeks, this buying pressure may not be enough to reverse the market on its own.
This is what makes SpaceX's IPO different from a typical first day of trading: it's not a single event, but a series of events involving the flow of funds.
The first day was order flow trading, not chart trading.
The most important lesson to learn from SpaceX's first day is: don't treat it as a chart trade.
Ordinary traders are used to asking: Where is the support? Where is the resistance? Where is the previous high? Where is the area of high trading volume? What is the biggest pain point of options trading? But on the first day of an IPO, most of these questions remain unanswered. Without historical charts, there are no reliable technical structures; without a mature options market, there are no open interest contracts to reference.
The real questions on the first day are: Where do buyers and sellers reach an agreement? Where does a large turnover occur? Are there any buyers willing to support the price after it falls below the offering price? Are there any sellers continuously replenishing their positions when the price rises? These are the core questions of order flow trading.
The initial key price levels must be determined by the market itself on the day. The first is $135, the offering price set in the video. Traders need to observe the price's performance relative to $135: can it quickly recover after falling below it? Can it sustain its position after rising above it? If there is buying support every time the price falls below $135, it suggests this level may become an early cost anchor; if there is selling pressure every time the price rises above $135, it indicates stronger supply above.
Secondly, there's VWAP (Volume Weighted Average Price, representing the average transaction cost in the market that day). Whether the price is above or below VWAP in the first hour after listing, and whether it finds support when it retraces to VWAP, directly reflects who has the upper hand between buyers and sellers.
Finally, there are the high and low points of the first day. After the market closes, the highest and lowest prices of the first day will become the most important structural references for the following days. For a newly listed stock without historical charts, the price range of the first day is the first coordinate system formed by the market.
Four types of money flows that drive prices
The price fluctuations in the early stages of SpaceX's IPO can be broken down into four types of cash flows.
The first type is the scarcity buying power created by extremely low free float. A 3% free float means very few shares are available for trading in the market, and even a slight concentration of demand can drive the stock price up rapidly. This is why blindly shorting on the first day is extremely dangerous. Stocks with low free float may not necessarily rise indefinitely, but they are most likely to "crush" short sellers in a short period of time.
The second type is passive buying resulting from the inclusion in the Nasdaq index. If NDX is included on the 15th trading day, index funds and related products are required to buy according to the rules. This type of capital does not place orders based on valuation, but rather on index weights. For bulls, this is an ideal mechanical demand; for short-term traders, it is a window of opportunity to trade in advance.
The third type is option reflexivity (where the options market, in turn, influences the price of the underlying stock). Once options are listed, a large influx of call options by retail investors may force market makers to buy the underlying stock to hedge, thus creating a Gamma cycle (option buying drives market makers to buy the underlying stock to hedge, further amplifying the price increase). However, this mechanism usually does not appear immediately on the first day of listing, and may not even be fully developed in the first week.
The fourth category is share unlocks (i.e., shares restricted from sale gradually entering the market). This creates new supply and is a risk that all long-term investors must pay attention to. SpaceX is unique in that it doesn't simply wait 180 days for a one-time unlock, but may release shares in stages.
Timeline for lifting restrictions: Not a sudden, 180-day abrupt halt.
A common risk in traditional IPOs is the sudden release of shares held by early investors and employees after the 180-day lock-up period, leading to a surge in market supply. However, the SpaceX share release structure presented in the video is more complex: it may not be a one-off cliff, but rather a series of phased liquidity events.
First, up to 20% of eligible shares may be unlocked two days after the initial earnings report. This means that the earnings report is not only a performance event but also a supply event. If the stock price is driven up by sentiment before the earnings report, the new supply after the report may suppress momentum.
Secondly, the unlocking may also be linked to price performance. If the stock price remains above $135 by more than 30% for 5 out of the 10 trading days preceding the earnings report, an additional 10% may be unlocked. Such arrangements allow the price increase itself to trigger more supply, creating a dynamic balance: the more the price rises, the more shares may become available for sale later.
Subsequent milestones are equally important. The video mentions that approximately 7% of the shares may unlock on day 70, day 90, and day 120, with full unlocking after day 180. Regarding employee stock, approximately 5% of employee holdings may be sold immediately after the initial earnings report, without additional performance or price conditions. Musk and the largest shareholder, however, may need to wait over a year, approximately 366 days.
These dates are especially important for long-term investors. To determine whether SpaceX has formed a true bottom, one cannot simply look at the price fluctuations on its first day of trading, but rather at whether the market can absorb the increased supply each time it enters the market.
Lessons from past IPOs: Coinbase, Airbnb, and ARM did not start with a one-sided trend.
Popular IPOs can easily create the illusion that high market attention guarantees a continuous upward trend after listing. However, the early trading of Coinbase, Airbnb, and ARM demonstrates that hype does not equate to a one-sided trend.
The video mentions that these popular IPOs all experienced significant volatility in their early stages. Coinbase saw early fluctuations of approximately 119 points, Airbnb around 53 points, and ARM around 22 points. The key point isn't the specific numbers themselves, but rather that they illustrate that the first few days and weeks of a popular IPO often involve intense two-way trading rather than a stable trend.
This type of environment is more suitable for day scalpers (traders who profit by frequently entering and exiting small price swings over short periods) and order flow traders, rather than ordinary trend followers. Trend traders need structure, but that's exactly what's lacking in the early stages of an IPO.
SpaceX may be even more extreme. It's already heavily oversubscribed, potentially allowing even more retail investors to receive allocations early. This means that after the market opens, there will be both funds chasing the rally and funds taking profits; some want to buy in anticipation of the 15-day index inclusion, while others see the high hype itself as a selling opportunity. With both bullish and bearish forces crowding in simultaneously, the result is often not a clean trend, but rather high turnover, high volatility, and high noise.
Day 1 Trading Strategy: Wait for the market to establish its structure before taking action.
The first rule for SpaceX's first day of trading is not to chase the first wave of trading.
The opening bell is typically the noisiest, most volatile, and most emotionally charged moment. Especially in a low-float market, the initial surge may just be a temporary sell-off, and the initial drop may simply be a sharp decline caused by insufficient liquidity. A truly tradable structure requires the market to develop.
The first point to watch is $135. If the price falls below $135 and then quickly recovers, regaining its position above the opening range and VWAP, it indicates genuine support below. Conversely, if the price repeatedly attempts to rise above $135 but is sold off, it suggests that sellers may be in control.
The second point of observation is the 5-minute opening range (the high and low range formed in the first 5 minutes after the market opens). Using the 5-minute or 30-minute opening range to filter out noise can prevent getting caught in stop-loss triggers too early. If the opening range is narrow, a subsequent breakout is more meaningful because a large number of short-term positions are concentrated within a limited price range, and once the price leaves the range, stop-loss orders and chasing orders will be more easily triggered.
The third point of observation is the VWAP (Very Low Wrap). If the price trades above the VWAP one hour after listing, and pullbacks to the VWAP are quickly met with buying pressure, it could be a signal that the bulls are in control. Conversely, if the price remains below the VWAP for an extended period with weak rebounds, it indicates that the average daily trading cost is becoming a resistance level.
The fourth observation point is the "Ghost Level" (i.e., a position in the order book where hidden buying and selling forces are continuously absorbing trades). If a certain price level appears to have small order books, but trading volume remains high and the price consistently fails to break through, it indicates that there may be hidden sellers continuously replenishing their positions there. Conversely, if there is continuous trading at a low level but the price fails to fall, it may also indicate that there are hidden buyers absorbing the shares.
These temporary price levels may not be meaningful for the next few months, but they are crucial on the first day. Because without historical charts, they are the first roadmaps the market has just generated.
Position control and risk management: Don't trade newly listed stocks with low free float as blue-chip stocks.
SpaceX may be a large company, but its initial trading characteristics may not necessarily resemble those of a large blue-chip stock.
If the circulating supply is only 3%, the order book may be very thin, the bid-ask spread (the difference between the bid and ask prices) may be wide, and the price may fluctuate rapidly due to continuous order sweeps. In addition, the options market may not be mature in its early stages, and traders lack hedging tools. Excessive positions can easily amplify losses due to slippage and trading halt risks.
Therefore, you cannot trade SpaceX using the same position sizes as you would for mature large-cap stocks like Apple, Microsoft, or Nvidia. Beginners who simply want to learn order flow should start with extremely small positions, or even just observe without trading. For most people, missing the first day's opportunity isn't the worst problem; the biggest risk is being driven by FOMO to enter the market with a large position at the most chaotic point.
Short-term traders need to accept the reality that the most important thing on the first day is not to profit from every fluctuation, but to avoid being "washed out" by the market in unstructured positions. Long-term investors should focus more on subsequent supply milestones rather than rushing to prove they were right about SpaceX on the first day of listing.
Four things you must know
First, the first 15 trading days will likely be driven by sentiment. The extremely low float, huge attention, and lack of technical support levels will mean that prices will primarily rely on order flow and short-term funds.
Second, the 15th trading day could be a turning point in the nature of the funds. If SpaceX is included in the Nasdaq 100, price-insensitive mechanical buying may enter the market, and active funds may also trade in anticipation of this.
Third, the first earnings report is not only a performance event but also a point of supply pressure. Some shares may begin to unlock after the earnings report, and the market needs to prove that it can absorb the increased supply.
Fourth, the lifting of the lock-up period is not a one-off event, but rather a series of liquidity tests throughout the coming year. The unlocking of shares by major shareholders after 70 days, 90 days, 120 days, 180 days, and even a year will re-examine SpaceX's true buying power.
SpaceX-related stocks worth watching
During SpaceX's IPO, it's also worth paying attention to related industry proxies (which are substitutes used to represent similar themes or risk exposures when the core assets cannot be traded directly).
Stocks related to aerospace, defense, rocket launches, satellites, and the space economy may see capital outflows due to the market hype surrounding SpaceX. Examples mentioned in the video include Space Labs (RKLB) and LUNR, among other space-related companies.
The opportunity in these shadow stocks lies not in their guaranteed profit, but in their potential to serve as an alternative channel for capital to express the SpaceX theme. Especially when SpaceX itself has too wide a price range, too high volatility, and too low a float, some related stocks with better liquidity may offer a clearer trading structure.
However, proxy trading must be verified on the market. If the relevant stock only rises briefly without trading volume, sustainability, or relative strength, the SpaceX logic cannot be forcibly applied.
