Petri Redelinghuys of Herenya Capital Advisors on local stocks and SpaceX.

With SpaceX (SPCX) going public last Friday, and the oil prices continuing to plummet, as the war in the Middle East reaches a possible conclusion tomorrow (Friday, 19th June), calling it an “interesting week” would be the understatement of the month. But it can be overwhelming to navigate financially through interesting times, and we’re here to discuss a few topics on both the centre and the periphery of public attention.

Local Stocks

Undervalued local stocks in South Africa are a kind of investment opportunity that usually go unnoticed in the presence of trends that get all the media attention. A year ago, Sasol (SOL) was one such overlooked and beaten-down stock, and today we see local retailers Pick n Pay (PIK), property stocks and banks as interesting for similar reasons. This is especially the case with cash-oriented retailers, as they have significant growth potential when the war is over.

Space Exploration Technologies Corp. (SPCX)

Space Exploration Technologies Corp., colloquially known as SpaceX, went public last week, with the highest IPO (Initial Public Offering) ever recorded. It’s currently at the centre of attention, as it reaches a total value around $2.5trillion. This puts SpaceX in the same ballpark as Amazon (AMZN) despite the latter’s significantly higher revenue ($758 billion, against SpaceX’s $18 billion). The growth is partially a result of SpaceX’s ventures into less obvious fields such as A.I., internet and social media. But this is also in no small part due to the IPO investors’ obligation to keep their shares until the company’s first earnings in August of this year, while Musk could further reduce the free float of the stocks by using call options to force banks and fund managers into buying SpaceX stocks.

​While we don’t intend to invest in SpaceX, we expect August to be an interesting month, both because we will learn more about SpaceX’s performance and see how the IPO investors react once they’re no longer obliged to keep their shares.

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*Please note that these trade ideas form part of a larger weekly plan and the value of financial products can increase as well as decrease over time, depending on the value of the underlying securities and market conditions. The risk of loss arising from trading in Contracts for Difference can be substantial. You should carefully consider whether such investments are suitable for you in the light of your circumstances and financial resources.