The SpaceX IPO Trap: And Three Plays I’m Watching Instead

The SpaceX IPO trap isn’t new. Investors fell for it on a company called Root back in 2020. You don’t remember Root? That’s exactly my point.

Root was an Ohio car insurance company. They used mobile data to price policies based on how you actually drive. It was a genuinely clever idea. And in October 2020, the media treated it like they’d discovered fire.

I remember reading the coverage. Every outlet called it disruptive. You couldn’t find a bearish word written about this company anywhere. The IPO was a blockbuster.

Root went public at $27 in October 2020. It opened at $26. It got as high as $29.48 and closed at $27. Eight weeks later it was at $14. By March of 2023, it was at a split-equivalent of $0.18

Today that stock trades around $44. That’s after an 18-for-1 reverse split. On a presplit basis, the stock is trading at $2.44. The IPO buyers paid a split-adjusted price of $486.

That’s the price of buying into hype and hope.

The company is still operating. It’s actually been profitable in recent quarters. But the people who bought at the IPO? They’re still sitting on massive losses.

That’s the IPO trap. And it runs deeper than most people realize.

The Pattern I've Watched Play Out Again and Again