Rupert Mitchell

The SpaceX IPO will create massive supply pressure on the top of the S&P 500, as passive funds must sell existing mega-cap stocks to raise cash for the new inclusion, and hedge funds warehouse the stock. This will cause the equal-weight S&P 500 (RSP) to outperform the mega-cap MAG7 stocks until the deal is fully seasoned, likely 9-12 months.

Ahead of the SpaceX IPO, fanboys will rotate out of Tesla into the new SpaceX stock, causing selling pressure on Tesla. Shorting Tesla is the midcurve trade into the IPO.