The largest IPO in market history is finally here. Elon Musk’s SpaceX started trading on Nasdaq at $135 per share, raised $75 billion and reached a massive valuation of $1.77 trillion.
Although the launch has created huge excitement, says Chart analyst says Michael Burry that the Nasdaq 100 could face a massive sell-off before a major buying event in July.
SpaceX IPO pushes Musk’s fortune to $1 trillion
On June 12, SpaceX launched its initial public offering 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 stock market listings ever.
Investor demand was huge, with reports showing that there were more than $250 billion in orders for the IPO, almost four times the number of shares available.
To participate in such a large offering, many mutual funds often sell other assets to raise cash.
The IPO also increased Elon Musk’s wealth. His stake in SpaceX is now worth about $866 billion, putting his total net worth above $1 trillion, when combined with his stakes in Tesla and other companies.
Why Michael Burry expects more technology sales
While many investors are focused on SpaceX’s first day of trading, Michael Burry believes a bigger market shift is already underway.
“We started the technology sell-off ahead of the SpaceX IPO,” he said, pointing to recent weakness in major tech stocks.
His argument is simple: big investment funds need cash to buy SpaceX stock. To raise that money, many institutions are reducing their positions in major tech stocks, including companies like Nvidia, Apple and Microsoft.
The result could be continued weakness in the Nasdaq 100 during the 15-day waiting period before SpaceX becomes eligible for inclusion in the index.
Burry warns of a new decline in the Nasdaq
In a recent market analysis, Burry noted that the Nasdaq 100 had already fallen 8.34% before showing signs of a near-term recovery. According to him, this revival may only be temporary.
His chart analysis shows multiple bearish divergences between both the RSI and MACD indicators, signals that traders often look for signs of weakening momentum.
However, Burry’s chart also outlines an Elliott Wave structure, suggesting that the current rally could be a Wave 2 recovery before a larger Wave 3 decline develops.
This means the market may be on the rise before another move lower.
July 6 could be an important date
Furthermore, Burry points to July 6 as an important date for investors.
Under Nasdaq’s Fast Entry rules, many passive index funds and ETFs that track the Nasdaq 100 cannot immediately purchase newly listed companies. Instead, they have to wait before adding SpaceX to their portfolios.
Once that waiting period is over, billions of dollars from index funds could flow into SpaceX stock at the same time.
According to Burry, the market could move in two phases. First, technology stocks may face selling pressure as funds raise money to buy SpaceX stock. Once SpaceX is added to the Nasdaq, index funds could start buying the stock, potentially driving the price up.
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