Dennis Davitt hasn't seen anything like this since 2004. That's the part of the story we're supposed to focus on. Not which IPO he's comparing it to. Not what happened to that one. Just that a CIO at Millbank Dartmoor Portsmouth is experiencing déjà vu and we should all be very concerned.
The SpaceX IPO presents a hedging problem because shorting a company with NASA contracts is like shorting the Department of Defense during wartime. You're not betting against Elon Musk. You're betting against the United States deciding it would prefer not to have a space program. Bold strategy.
Investors are nervous about their positions. They should be. Half of them probably bought calls based on a rocket launch livestream they watched while high. The other half are hedge funds trying to model the fair value of a company whose primary customer is a government agency that once spent $125 million on a launch tower. For a rocket that never launched.
Davitt's quote implies there's no obvious way to hedge this thing. Can't short it because the U.S. government keeps writing checks. Can't go long without accepting that you're buying shares in a company valued on vibes and PowerPoints about Mars colonies. The risk-reward profile looks like a middle finger.
The real hedging challenge isn't NASA exposure. It's figuring out how to explain to your investors that you bought an IPO because the CEO posted a meme about Dogecoin and you thought it was bullish. "What are you going to do, short NASA?" is not a thesis. It's a cry for help from someone who confused a government contract backlog with a moat.
Retail traders will buy it anyway. They always do. They'll call it "generational wealth" right up until they're comparing loss porn screenshots in a Discord server, wondering if Wendy's is still hiring.
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