Retail Investors Rush to SpaceX: Pouring $370 Million in Three Days, Magnificent Seven Shunned

TradingKey - As SpaceX ( SPCX) lists on Nasdaq, an unprecedented retail investment craze is sweeping Wall Street. The space exploration giant, founded by Elon Musk, not only attracted over $100 billion in retail subscriptions on its debut day, but also demonstrated astonishing capital-attracting power in early trading, breaking the retail investment landscape previously dominated by tech giants.

Latest data from Vanda Research shows that in the first three trading days following SpaceX's listing, net retail purchases of the stock reached a whopping $369.8 million, a figure exceeding the combined net purchases over the same period for Apple ( AAPL ), Microsoft ( MSFT ), Nvidia ( NVDA ), Google ( GOOGL ), Amazon ( AMZN ), Meta ( META) and Tesla ( TSLA) that make up the 'Magnificent Seven' tech giants, highlighting retail capital's frenzied pursuit of this newly crowned star stock.

Source: Vanda

As of Wednesday's close, SpaceX shares were trading at $191.82, up more than 40% from the IPO price of $135. The stock touched an intraday high of $210.45, briefly pushing its market capitalization past Microsoft and Amazon to become the third most valuable public company in the world.

For retail investors who bought into SpaceX at the IPO price, current paper gains are around 45%, a return that far outpaces the performance of major tech giants over the same period.

Retail capital siphoning effect emerges, tech giants sidelined

Prior to SpaceX's listing, Nvidia had long held the top spot in retail net purchases, maintaining this position as recently as the week before the listing. However, once SpaceX went public, this landscape underwent a dramatic shift.

Data from Vanda Research reveals the staggering scale of retail inflows following SpaceX's listing: during the first three trading days, retail investors net purchased $369.8 million of SpaceX stock, whereas Nvidia's net purchases over the same period were just $88.2 million, less than a quarter of SpaceX's figure.

Even more striking is that Tesla and Apple—two companies that have long topped the list of retail favorites—actually experienced net selling during the same period, an occurrence extremely rare in historical market behavior.

Vanda noted in its research report that retail buying of SpaceX over the past three trading days was roughly equivalent to the combined purchases of Nvidia, Google, Amazon, Microsoft, Meta, the SPDR S&P 500 ETF (SPY), and the Invesco QQQ Trust (QQQ).

Notably, because Tesla and Apple both saw net retail selling during this period, they were excluded from the comparison. This data fully demonstrates SpaceX's powerful siphon effect on retail capital, as retail investors appeared willing to concentrate all their funds into this single stock rather than diversifying across multiple holdings.

This concentration of capital is not limited to U.S. retail investors. On SpaceX's first day of trading, South Korean overseas retail investors, known as "seohak ants," snapped up nearly $800 million of SpaceX stock.

According to data from the Korea Securities Depository, South Korean retail investors registered a single-day net purchase of $796 million, a daily net inflow that exceeded the cumulative net purchases of any other U.S. stock over the past three months.

Hidden Concerns Behind the Frenzy

However, this high concentration of capital in a single asset has also sparked market concerns. Vanda Research pointed out that SpaceX's strong capacity to attract inflows has not lifted other stocks in tandem, meaning retail capital is heavily concentrated in a single target rather than driving a broad-based rally.

For the market, this phenomenon warrants close monitoring, as excessively concentrated capital flows could increase market volatility. If SpaceX's stock price experiences sharp fluctuations, it could trigger a chain reaction and impact the broader market.

Furthermore, the sharp volatility in SpaceX's stock price is also tied to its low public float. On its trading debut, only about 4.2% of the total outstanding shares were available for trading. As the lockup periods restricting insider stock sales expire over the coming months, it could exert downward pressure on the stock price.

The emergence of SpaceX's first down day since its debut has also prompted the market to question whether this frenzied rally can be sustained.

Nevertheless, some institutions remain optimistic about SpaceX's long-term prospects. Michael Monaghan, partner and portfolio manager at Dallas-based Founder Funds, stated that they might add to their positions if SpaceX's stock price drops further.