The largest IPO in the history of the stock market is here. Elon Musk’s SpaceX started trading on the Nasdaq at $135 per share, raising $75 billion and earning a net profit of $1.77 trillion.
Although the launch has caused a lot of excitement, Chart expert Michael Burry says that the Nasdaq 100 could face a major sell-off before the big buying event in July.
SpaceX IPO Pushes Musk’s Net Worth to $1 Trillion
On June 12, Images of SpaceX launched its IPO by offering 555.5 million shares under the ticker SPCX. The company is now valued at approximately $1.77 trillion, making it one of the largest listed companies in the stock market.
Investor demand has been high, with reports indicating more than $250 billion in IPO funding, nearly four times the current share.
To get such a large stake, many mutual funds often sell other assets to raise money.
The IPO has also boosted Elon Musk’s fortune. His SpaceX stock is now worth about $866 billion, helping push his total net worth to $1 trillion when combined with his holdings in Tesla and other companies.
Here’s Why Michael Burry Expects High Tech Trading
While many investors are focused on SpaceX’s first day, Michael Burry believes that the biggest change in the market is already here.
“We’ve started a tech selloff ahead of the SpaceX IPO,” he said, pointing to recent weakness in major tech stocks.
His argument is simple, that big investment funds need money to buy SpaceX shares. To raise the funds, many corporations are reducing positions in major technology companies, including companies such as Nvidia, Apple, and Microsoft.
The result could be continued weakness in the Nasdaq 100 during the 15-day wait before SpaceX is eligible for inclusion.
Burry Warns of Nasdaq Another Drop
In a recent analysis of the market, Burry said that the Nasdaq 100 had already fallen 8.34% before showing signs of temporary recovery. According to him, this jump may be temporary.
His chart analysis shows bearish divergences on both the RSI and MACD models, indicating that traders are generally seeing bearish signals.
However, Burry’s chart also shows an Elliott Wave formation, indicating that the current rally may be a wave 2 recovery before a major wave 3 collapse.
This means that the market may rally before another leg down.
July 6 May Be a Very Important Day
Beyond that, Burry points to July 6 as a big day for investors.
Under Nasdaq’s Fast Entry rules, most hedge funds and ETFs that track the Nasdaq 100 cannot buy newly listed companies. Instead, they should wait before adding Images of SpaceX to their portfolios.
Once the waiting period is over, billions of dollars from the plan’s funding could flow into SpaceX shares immediately.
According to Burry, the market can move in two phases. First, tech stocks may experience sales difficulties as funds raise funds to buy shares of SpaceX. Then, once SpaceX is added to the Nasdaq, index funds can start buying the stock, which can drive up its value.
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