Joey 0:00
All right, welcome back to Wealth Unplugged. It is Friday, June 5, 2026, and I am flying solo today. My name is Joey Loss and I wanted to do something different than our usual back and forth about the markets. And that's because there's one question I've gotten more than any other question these last three weeks. It's happened at the office, it's happened on the radio, and I was at a wedding in Nashville last week and it came up more than once. And that question is some version of how do I get in on SpaceX? So today I'm going to answer that fully. But I'm not going to hand you a hot take and send you on your way. I'm going to walk you through where the market actually sits right now. I'm going to talk about the engine under the hood of the economy. And then we're going to use SpaceX as a perfect live case study for something that every investor should understand. And that is how does a brand new stock actually find its way into your portfolio whether you buy an individual share or not? So segment one, where is the market today? And here is the year to date scorecard. The S&P 500 is up a little under 10% on the year. By all means, if the year ended today, that would be an excellent year, right in line with historical averages for a full 12 month year. The NASDAQ 100 is leading the US PAC up around 18%. Stellar year, really, driven by tech. And the Dow is the laggard of the big three indices. It is up about 7%. And here is the one data point that seems to surprise people and that is small caps which have been pretty sleepy for the last 10, 12 years. The Russell 2000 index representing small cap US stocks is up over 16%. Also waking up is emerging markets which are up north of 21%. So all in all, this is not a narrow seven stocks carrying the everything market. Like we've talked about in years past, this particip is broad, this is healthy. And frankly, I'll take this kind of market over what we saw in the first half of last year any day of the week. I don't like it when it's only six or seven stocks leading the market. I want to see everything doing well because that says everybody's participating and it means the foundation underneath the market is stronger. There's two things on the scoreboard that are screaming and they're telling the same story from opposite ends. The first one is oil. And this is not news for anybody? We're over 90 days into the war with Iran. Crude oil is up nearly 60% year to date. And Brent oil is not far behind. For those that don't know, crude is the US index for oil, Brent is the international index for oil. They usually track right together. Sometimes there's a gap. When there is a gap, there's a story there. But they're moving mostly in lockstep at this point. And this is not a normal move. It is not a demand story. The oil movements are all about the war. The conflict with Iran and the pressure on the Strait of Hormuz has put a fear premium into every barrel that's on the planet and you're paying for it at the pump. Gas crossed $4 a gallon nationally for the first time in over three years. And if you live in places like California or Hawaii where gas is normally a little bit more expensive, you might be seeing five, six and seven dollars a gallon, depending on what type of gas you're using. The second screamer is in the opposite direction and that is Bitcoin. Bitcoin is down about 30% on the year and it's down 17% in just the last five trading days. When risk gets nervous and oil driven inflation comes back into the conversation, the most speculative corner of the market is the first thing that gets sold. That's a textbook response. And gold, for what it's worth is basically flat. It has not been the hedge that people expected this year. So that's the scoreboard. Broadly green, led by tech and small caps, with a war driven oil spike and crypto washout on the edges. Segment two, looking at fundamentals, really, Adam and I focus on four gauges. The first one is we look at corporate profits. This tells most of the story. We also look at the jobs market because that tells us a little bit about what's coming, potentially inflation, same thing. And the Fed just kind of tells us, rounds out the system as far as what can we expect over the next six to 12, 24 months. So gauge one, corporate profits. This one is looking phenomenal. First quarter earnings just wrapped and the numbers were Excellent. S&P 500 earnings grew about 15% year over year. This is the fastest growth rate since the end of 2021. 85% of companies beat their earnings estimates, which is about, which is above the 5 and 10 year averages. And the most important figure, net profit margins came in around 13.5% year over year. This is the highest level on record since they tracking it back in 2009. What does this mean? It means American companies are keeping more of every dollar they bring in than at any point in the last 17 years. And this is happening while energy and input costs are rising. This is a remarkable display of corporate strength. All 11 sectors grew revenue in Q1. So whatever else is going on, the bulk of businesses you own through broad market funds are making money. And that's just, it's just the way it is right now. And that's why the market is up. Gauge number two, let's look at jobs. This is also looking surprisingly strong. The May jobs report came out actually this morning. This is Friday, June 5th. At the time of recording, the economy added 172,000 jobs in the month of May. And this came against a forecast of 80,000. This just means reality doubled what was expected for new jobs in May. Unemployment overall held steady at 4.3% and wages were up about 3.4% year over year. And they actually revised the prior month up in that regard. So one major labor market strategist described the current labor market as pretty darn solid. That was his technical diagnosis. And I would say that I agree. That's things that we all like to see. And it kind of flies in the face of some of the storylines we've been expecting. A lot of strategists and AI doomers have been saying AI is going to destroy jobs. Maybe that will happen at some point in the future. But I just work with what data we see today and that is just not at a macro level. What we see, gauge number three, is inflation. This is when we start to get to some problem areas. I'd say this is an orange flag at the moment. I wouldn't put it as full red. But here's the tension. So the economy is strong, but the oil shock is bleeding into prices. The last official CPI reading had inflation at 3.8% year over year. This is the hottest since May of 2023. Energy was up almost 18% and beef was up nearly 15% year over year. Now, government data can be built on limited sourcing and slow to be accurate. So I always cross check the official government CPI against truflation, which is a real time daily inflation index built from millions of live price points instead of a survey that lands a month late, which is the case for the CPI reports. And so right now, truflation is also running hot. The real time data and official data agree prices are reheating almost entirely due to oil prices. So the next official print lands June 10, and a lot of economists think that we could see inflation Year over year, rise to as high as 4%. 4% is not doomed territory, but it's not a great number. It's something for us to watch. And for the first time in about three years, wages are no longer outrunning inflation. And that's the part that really becomes an orange flag. That's where you know, if that remains the case, that things are becoming more expensive faster than people's wages are rising. That's where you start to grow a legitimate concern about the future. We hope that that does not continue for too long. The longer it goes on, just like with oil prices, the longer oil prices are higher, the more serious the long term damage to inflation becomes. The same is true with the wages versus inflation element. So gauge number four, this is the Fed and May was a eventful, was an eventful month for the Fed. We have a new Fed chair, his name is Kevin Warsh and he took the chair from Jerome Powell in May, about mid May. And Warsh historically leans hawkish, which means he's not afraid to raise, right? Rise rates, raise rates to fight inflation. With jobs this strong and inflation reheating, the Fed has every reason to sit on its hands. I don't see any rate cuts coming anytime soon, just based on where things stand. And a strong jobs report is good news for the economy. We'd like to see that. But it's bad news for anyone who's praying for cheaper rates on short term loans. Overall, this is a positive for anyone with high yield savings accounts and short term bonds because higher rates just mean you'll get more for sitting on your cash in those places. So if we wrap up all four of these gauges, I would say the engine is strong, record profits, solid jobs, but it's running on an expensive fuel and the Fed has good reason not to come and make it easier to borrow money by lowering rates. And so easy money policy is when the Fed lowers rates, increases money supply and makes it easy for money to get into this system in a way. For those that are really concerned about a bubble, moderate to tight money policy, which is kind of the Fed's current stance, is what you would like to see. Because if corporate profits can still rise on that environment and you're seeing corporate profits and free cash flow funding the build out of infrastructure for AI, which is currently the case, that's kind of the lowest risk backdrop you could have for a massive industrial revolution, a technological revolution as the present. That doesn't mean a bubble still can't form, but I think it makes it way harder For a bubble anything compared to the likes of 2000 to occur. Back then you had a lot of easy money. People were paying absurd prices for stocks that had just slapped a.com at the end of it, but they didn't have any sales or any real data to back it up. That's just not the case. Now. Some of these AI companies, I mean most of them are losing money, but their revenue growth rate is absurd. Anthropic is just running through the roof, growing the fastest of the three. And I think that's just a different environment and one that bodes for positivity if it's able to continue. So moving on to the main event, everybody wants to know about SpaceX. So I'm going to set the table and I'm going to keep the facts pretty tight because they are moving fast.
Joey 11:07
I wanted to wait until there's enough information out there that I could give a useful story and guidebook for how to navigate the SpaceX IPO for yourself. And that was really up until today that I felt confident enough based on the information to put something useful together. So if you haven't heard, SpaceX is going public. The ticker is going to be SPCX and it will be listed on the NASDAQ exchange. The IPO roadshow kicked off this week and the final pricing announcement is set for June 11. The stock will start trading June 12 and the numbers involved are historic. SpaceX will sell 555 million shares at a fixed price of about $135 a share, raising a total of $75 billion for the company. That makes this the largest IPO in the history of the United States. The valuation for the company ends up at about 1.75 trillion based on those numbers, which would make SpaceX on day one roughly the seventh largest public company in America. Bigger than Berkshire Hathaway and bigger than Tesla, notably the other Elon owned public company. And one detail that I love because it's so on brand for Elon is they skipped the traditional price range process. Normally a company files with a range, we think, you know, quote, we think it'll price between X and Y. And then following that, there's weeks of negotiation through the big institutions to figure out what is the actual appropriate price. Instead, SpaceX filed with the price fields blank and then just handed the market a number, 135 a share, take it or leave it. And that tells you something about how much demand they know is out there for SpaceX stock. So before I get further into SpaceX details I want to talk more generally about what an IPO is, because we throw the term around like everyone already knows that, and I don't think people really do. So what is an IPO? An IPO stands for initial public offering. Up until now, SpaceX has been a private company owned by Elon, owned by employees by venture funds and a handful of wealthy insiders. You and I could not directly buy a share at any price, so long as it is private. An IPO is the moment a private company sells a slice of itself to the public for the first time, so its shares can then trade on an exchange like the nasdaq. Why do companies do it? There's two main reasons. One, it raises a giant pile of cash. In this case, 75 billion, and that helps fund the business operations. Number two, it gives all those early insiders and employees a way to finally turn their paper shares into real spendable money. It's a liquidity moment for everybody who's been a part of the train for a long time and not had access to the capital. So here's the part that people get wrong, and it's the question I get most Can I buy in at the IPO price, $135? Honestly, the answer is mostly no. And here's how the plumbing works. And the reason that that's the case for an IPO, a company hires investment banks. SpaceX has 20 of them, 21 of them actually, led by Goldman Sachs. And those banks called underwriters, buy the shares and then distribute them. That initial allocation goes overwhelmingly to the big institutions, hedge funds, pension funds, and the bank's best clients. As advisors, like in our case, we can submit what's called an indication of interest to participate in an offering on behalf of our clients. But, and I've had to be crystal clear about this with clients, submitting a request is not the same as getting shares. When a deal is this hot and supply is this tight, there's no guarantee of an allocation, and there's really nothing we can do to get a guarantee. We have an allocation request going for our clients right now that have expressed interest in owning shares directly. We may get a fraction of it, or we might get shut out entirely. It's out of our hands beyond the request. And so SpaceX is interestingly, carving out an unusually large 30% of the deal. For retail investors, this is about three times the normal amount. But even that gets oversubscribed to instantly when the whole country wants in, as is the case for SpaceX. So for the vast majority of regular Investors, you don't get to buy at 1:35. You buy on June 12th on the open market at whatever price the stock is trading at, which could be well above the IPO price if demand is as wild as expected. That distinction, the IPO price versus what you'll actually pay on the open market or the secondary market, where all the current, current public stocks are trading, is an important thing to understand. So number five, segment five, let's talk about what are you actually buying if you buy SpaceX stock? And I think that discussion starts with a conversation about what SpaceX is from a company perspective today. And if I asked you that question, what is SpaceX? You might say rockets, based on what you've seen in the media. You might talk about Falcon 9, Starship landing, boosters on barges. Super cool. But if you read the actual IPO paperwork, which is called an S1, in other words, it's when a company declares to the SEC that it wants to go public, it has to describe itself. And in that S1, SpaceX said there's three parts to their businesses. There's space, which is rockets and launch. There's connectivity, which is Starlink, the satellite Internet, which is now a massive recurring revenue business. I think that's going to be the money lifeblood of early SpaceX. And then there's the third leg that got bolted on in February, and that is artificial intelligence. SpaceX merged with Xai Elon's AI company, the one behind Grok, the Grok chatbot and that pulled in the X social media platform underneath it. So the share you'd be buying is a rocket company. It's also a satellite Internet provider and it's also an AI lab with a social network attached. That is a wild thing for underwriters to try and figure out as one stock, which is why I made a comment earlier about the largely made up price. I mean, they, even SpaceX, as they filed, seem to know, like we don't know. We just want to win. We're doing all the things we can, but we have no idea what it's worth. And here's the part that company cheerleaders probably skip. SpaceX lost about $4.3 billion in the first quarter of this year alone. The legacy businesses, space and connectivity, are actually profitable. The losses are coming almost entirely from the AI side, which is burning something like $2.5 billion per quarter. They're sitting on an accumulated deficit north of 40 billion. So you're paying $1.75 trillion price tag for a company that is currently Losing money fast because the bet is not on what it is today, but on what it becomes. So Tesla notably was a money loser for many years, until it wasn't. The hype leading up to the IPO suggests the market will treat this company the same way. And that's where I want to bring in a comparison that I think is the most useful frame for this entire decision. If you cast your mind back to 1997, a little company went public. The S1, the same kind of paperwork SpaceX just filed described that company essentially as an online bookstore, an Internet retailer of books. That's the business. The stock priced around $18 a share, and the whole company was worth a few hundred million dollars. Plenty of smart people at the time looked at it and said, an online bookstore. At those losses, no, thank you. You probably know that that company was Amazon. And anyone who understood that the paperwork described a bookstore, but the ambition was to become the infrastructure of the entire Internet did extremely well over the next 20, 25 years because Amazon worked its way from selling paperbacks into selling everything and then into Amazon Web services becoming one of a handful of the hyperscaler cloud companies that the modern Internet literally runs on top of. That's the bull case for SpaceX. In one analogy, the filing says rockets and satellites in a money losing AI unit. But the ambition is to own the rails of space, global connectivity and artificial intelligence all at once. If that vision pays off, and that's a big if, today's price will look cheap in hindsight. And I think that's all of the energy that's going into the ipo. You have a company losing money and everybody's saying it's worth $1.75 trillion. I think they'll have no troubles getting rid of shares. That's what's baked into it for every Amazon. And I have to say this as a fiduciary, there's a graveyard of companies that filed with grand ambitions and never grew into the valuation. Buying the story at 1.75 trillion is a very different risk than buying Amazon's story at a few hundred million. To put it in perspective, Nvidia, the most richly valued of the mega cap companies, trades at around 21 times its sales today. And it's massively profitable. SpaceX is asking the market to pay a premium several times richer than that while losing money. You're paying for a full price vision today and you just need to go in with your eyes open about what you're betting on So here's my favorite part, and it's probably the part nobody explains to anyone. Even if you never buy directly a single share of SpaceX, if you own broad index funds, SpaceX is going to end up in your portfolio. The only questions are which funds get access and when. So I'm going to walk through that timeline because this is genuinely useful, I think, in determining your own personal plan, if you're at all interested in SpaceX. So first let's talk about a concept called seasoning.
Joey 21:11
Historically, when a company ipos, the major stock indexes wait to add them, The S&P 500 traditionally requires 12 months of public trading plus four straight quarters of profitability before it will let a new stock in. This is actually a big debate back then about getting Tesla in or not into the S&P 500. Investors wanted it in, but it didn't qualify by those standards. It became a big thing at the time. I actually just remembered that as I was looking through my notes here. That waiting period is the seasoning period, and it exists so that the stock can find some kind of stable price and prove it can be traded in size without going haywire, which is what indices generally don't want to. In anticipation of the ipo, though, there has been some messing around of the rules that these indices have lived by historically. So I'm going to go through each one. The Nasdaq is in the fast lane. Nasdaq changed its rules effective May 1. A new fast entry provision. Any newly public company big enough to rank in the top 40 by market cap can now join the NASDAQ 100 after just 15 trading days, down from the prior three months. SpaceX would easily qualify. And so the funds that track the NASDAQ 100 think QQQ or its cheaper sibling, QQQM, are likely to be forced buyers of SpaceX as early as the first week of July. And if you own QQQ or QQQM, you'll reportedly have SpaceX exposure within weeks of the IPO automatically. Now, what I've read it suggests you won't have perfectly proportionate exposure in the way that other more seasoned stocks will have in that index fund, but you will have access and some exposure nonetheless. So I wanted to point that out. The S&P 500, on the other hand, is taking a different approach. A lot of people, myself included, assumed that The S&P 500 would also rush SpaceX into the index. As of this week, though, that is off the table. S and P Global looked at changing its rules and decided just days ago to keep the old Criteria. Their statement was pointed. Being enormous, they said, is not enough on its own. SpaceX still has to season for roughly a year and turn profitable before it can enter the S&P 500. Given that it's losing billions right now. Realistically, that's a late 26 into 27 story at the earliest. And that's only if the AI unit stops bleeding so heavily against the rest. That matters more than it sounds. The S&P 500 is the benchmark for trillions of dollars of funds. Your spy, your Vanguard, Voo, your iShares, IVV. When SpaceX eventually joins that index, those funds will be forced to buy billions of dollars of it in a single rebalance. Estimates are that S&P 500 and NASDAQ 100 funds combined will have to absorb somewhere between 22 and 27 billion dollars of SpaceX in their respective inclusion days. That's a wall of mechanical buying. And just keep in mind the day one allocation is 75 billion. So you're talking about, I don't know, 30% or more, a third or more of the total allocation having to go into these funds. So there's a middle path here. The S and P did agree to change the rules for total market indexes, namely the S and P total Market index, which is what a fund like SPTM tracks, and the Dow Jones US Total Stock Market Index. So this means total market funds will get a slice of SpaceX sooner than the flagship S&P 500 funds like Voo, Spy and the Russell indices through FTSE. Russell will have an even faster five day window. So interestingly, if you own the Russell 1000, it will likely pick it up at its next reconstitution in the back half of the year. So here's the hierarchy. Qqq, QQQM will likely have exposure quickest early July, something like that. If what they're reporting holds total market funds like SPTM and the Russell, they'll get a small slice later this year. And I think looking at spy, Voo, IVV, they probably won't get exposure until SpaceX seasons for a full year and turns a profit. I would expect mid to late 2027. So this actually creates kind of a nice naturally diversified entry point strategy if you happen to own an array of these funds. I don't know your situation or whether owning stock based funds makes sense for you, so don't take any of what I've said here as a recommendation. I'm just simply the way that this all comes together as you consider your plans going Forward. So, to summarize, everything we've talked about, because I think this episode became a little more dense than I originally intended, but I want to explain it all. I think people are really interested about this. To summarize, if you want SpaceX exposure, you've got basically three roads and I'll give you some trade offs on each, not telling you which to pick. That's your call with your advisor. I'm just naming them clearly. So road one, buy SpaceX outright on the open market. Buy it on or after June 12th at whatever it's trading at. The upside here is you get full direct concentrated exposure to the story early. The downside is you're buying a money losing company at a trillion plus valuation on day one, when it's at its most volatile and the price may already be jacked up well above that 135ipo number. That is without question the highest risk, highest conviction road that you could take. And I think anyone who's looking at this should only do it with money that they can genuinely afford to watch swing 40 or 50% in either direction. Road 2, Dollar cost averaging in instead of one big bet, you could decide on a total amount that you want to have exposed directly to SpaceX and buy it in equal chunks over several months on the secondary market. So say you want $10,000 of exposure. Something could look like you buy 2,000amonth for five months and the benefit is you stop trying to be a hero on timing. A freshly IPO stock is wildly volatile. I think SpaceX is going to honestly set some records in that regard. And that's exactly what the seasoning period is about when the price is still being discovered. So dollar cost averaging smooths your entry across the chaos, so that one bad day doesn't define your whole position. I think it's a disciplined middle road, and for most people who want that direct exposure, it's the more sensible version of Road 1. If you plan to hold it for 10 to 15 years and believe in SpaceX ambitions, all of these entry points could end up looking early and reasonably priced in hindsight. Road number three, do nothing and let your index funds do the dripping of exposure over time. This is the one nobody finds that exciting, and it's the one that I want people to most consider. If you own QQQ or a total market fund, SpaceX is going to be coming to you automatically at a tiny, professionally weighted, risk appropriate slice of your portfolio on the schedule that I laid out about the indexes. So there's no FOMO Purchase at the top. No concentrated bet on a currently unprofitable company. The index decides how much SpaceX deserves to be in your portfolio based on its actual size, and it buys it for you. You wake up one morning in July, you own a little bit of SpaceX and you never lifted a finger. The same is true later this year and then again at some point next year, ideally. So here's the overall framing. The excitement of an IPO and the wisdom of an IPO are two different things. The instinct might be to back the truck up on day one, and that's the same instinct that gets people hurt if they're looking for a quick buck. You can just look at the Meta ipo or at the time Facebook or Snap, Meta became a monolith at some point. But it took time and a pretty unsuccessful IPO for the public stock to manifest that reality. For investors, meanwhile, the boring road letting a low cost index drip. The right amount of exposure in over time is more often than not the one that genuinely builds wealth and kind of forces good behavior. The reality is, if you've owned SPY or VOO or SPTM or qqq, you've enjoyed tremendous gains on stocks like Nvidia and Amazon over the years. And even if you weren't a part of the first couple years where it really started to rip, you've had many, many, many years of healthy exposure and gains since then. So I just want to let everybody know, like you've got your greed lenses on and that can lead to bad decisions. You could have a wildly successful outcome. That's always possible, but it's just worth really thinking about what's the right way to get exposure if SpaceX is interesting to you.
Joey 30:02
So to close this out, the market looks healthy, Record corporate profits, a strong jobs market, but it's wrestling with an oil driven inflation flare up and a Fed that's in no hurry to cut rates. That's the backdrop, and the biggest IPO in American history is landing right in the middle of it. SpaceX is a genuinely extraordinary company wearing a genuinely extraordinary price tag. And the smart way to think about it isn't how do I get rich on day one, it's how does this reasonably find its way into my long term plan? And for most of you, the answer is it already will, through the funds that you own on a schedule that the index has now made surprisingly clear. It's also worth noting that when it comes to potential monolithic IPOs this year, SpaceX is probably just the opening act. The two biggest names in AI OpenAI and Anthropic have both expressed desires to go public later this year. I expect we'll be talking about those in Future episodes for 2026, and the same frame will apply every time. We're talking IPOs. You got to understand what you're buying, understand the plumbing behind the numbers and the pricing, and don't let a thrilling headline talk you out of a boring plan that works. So that's the show. Thanks for listening. If this was useful, please share it with somebody who's been asking you about SpaceX. Or don't and wow them by being the smartest person at the barbecue. Unsurprisingly, I'd prefer if you did share it. So until next time, take care and we will talk after the ipo.