SpaceX IPO: Will The Stock Skyrocket Or Crash Tomorrow? | Jay Singh
Speakers
Jay Singh
— Founder, Special Situations Research; former Portfolio Manager, Goldman Sachs
Summary
Jay Singh examines the SpaceX IPO's extreme valuation, retail-heavy allocation, and loss-making profile, then shifts to his own special situations: a long in EchoStar (SATS) as a SpaceX proxy, a short in VCX due to extreme NAV premium ahead of lockup expiry, and merger arbitrage longs in Warner Bros. Discovery and MGM Resorts, plus a deep-value long in CVS Health. He also warns of froth in AI capex and the risk of a supply-chain unwind.
- SpaceX is set to IPO at $135/share for a $75B raise, giving a $1.75T valuation with heavy retail allocation and fast NASDAQ 100 inclusion.
- Jay Singh highlights negative free cash flow, Elon Musk's 82% voting control, and the merger of XAI into SpaceX as major risk factors.
- He prefers indirect exposure via EchoStar (SATS), which holds a SpaceX stake he values at over $160/SATS share vs a $116 trading price.
- A short thesis on VCX, a closed-end fund trading at 11x NAV, with a six-month lockup expiry in September expected to compress the premium.
- Merger arbitrage opportunities in Warner Bros. Discovery (WBD) with a 15% spread and MGM Resorts (MGM) with a $48.30 cash bid and possible topping offer.
- CVS Health (CVS) is called deeply undervalued on a sum-of-the-parts basis after a heavy sell-off tied to its PBM and insurance businesses.
- Singh cautions that AI hardware demand is inflated by circular deals among hyperscalers and could unwind if capex growth falters.
Ideas
EchoStar undervalued via SpaceX stake exposure.
EchoStar (SATS) holds a stake in SpaceX from a spectrum sale. At SpaceX's expected post-IPO valuation of $1.75 trillion, that stake is worth over $160 per SATS share, well above the current $116. SATS offers exposure to SpaceX with lower beta and potential upside if the IPO rallies.
VCX overvalued; lockup expiry to compress NAV.
VCX is a closed-end fund holding stakes in SpaceX, Anthropic, and other pre-IPO companies. It trades at an extreme premium to NAV (11x NAV even after adjusting for higher valuations of holdings). A six-month IPO lockup expires in September, which will likely trigger insider selling and compress the premium. Singh has reshorted VCX around $300 and the shares have already fallen to $150.
CVS deeply undervalued on sum-of-parts basis.
CVS Health (CVS) has sold off dramatically due to concerns over its PBM and insurance businesses, but the stock trades at an extremely cheap valuation on a sum-of-the-parts basis, offering deep value.
MGM buyout bid with potential topping offer.
MGM Resorts (MGM) has received a $48.30 per share all-cash buyout proposal from Peoples (formerly IA). Singh sees potential for a topping bid above the current offer, providing upside from his low cost basis.
Merger arb spread compresses if antitrust clears.
Warner Bros. Discovery (WBD) is the subject of a cash acquisition bid, creating the largest merger arbitrage spread in the market. The spread is about $4 per share, yielding roughly 15% if the deal clears antitrust review. The spread should compress as the antitrust process advances.
