The long-awaited IPO finally place: SpaceX is now a listed company. The buzz surrounding the listing was well orchestrated, the ‘storytelling’ euphoric. During the first two days of trading, SpaceX’s market capitalization soared, rising by as much as 50%, a figure to be put into context of an already quite generous IPO multiple (SpaceX is valued at circa 80 times its revenues!). The volatility of recent IPOs and likely valuation excesses are an integral part of how the US market operates; the adjustments made to fast-track SPACE X’s inclusion in indices and give it a higher weighting than permitted by its limited free-float are not. If the first cracks appearing towards month-end are a sign, the euphoria is unlikely to last… June also marked Kevin Warsh’s first meeting as the new FED Chairman and he surprised his audience – and possibly the White House – with quite a “hawkish” tone. This is not without any effects on financial markets. To some extent, it is also reminding us of the cryptic communication of Alan Greenspan who passed away. He was amongst the first in 1996 to speak of the “irrational exuberance” of financial markets. He cried wolf far too early, but today’s investors will be well advised not to forget Greenspan’s warning : With shorter cycles and a less accommodative FED Chairman, the exuberance of recent weeks could last a little less longer. We are discussing these topics in this newsletter.
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