Wildcard

SpaceX ($SPCX) took a US$2T round-trip in a week. Much like the Falcon 9, shares went into orbit and returned to earth, dropping 16% in Monday’s session alone. But unlike a reusable rocket, analysts question the utility of a company tying its revenue to ambitious future targets. Things like Mars colonisation, space data centres and of course, asteroid mining. 

‘Wildcard bets’ hinge on many things going right. It wouldn’t be the first time in market history that kind of thing has paid off. Take memory darling Micron ($MU), which just reported US$41.46B in Q3 revenue. The report came days after it signed a multi-year supply agreement and disclosed a strategic investment in Anthropic. 

In 2022, Micron had lost 47% of its value after pandemic-era PC and smartphone demand collapsed. Buried in its Q4 2022 earnings release was a footnote that Micron had ‘updated’ its strategy to focus on the data centre market. A bet that paid off as memory became a critical bottleneck for AI infrastructure players.

Another surprise play? The world’s largest free cash flow generator raising US$25B in debt this week. Nvidia’s ($NVDA) debt offering was over 3x oversubscribed, with investor orders reaching US$85B. 

Access to cheaper long-term debt lowers Nvidia’s cost of capital and allows the pursuit of strategic investments (like the US$5B committed to Intel ($INTC) or the US$10B to Anthropic). Importantly, it avoids shareholder dilution by issuing bonds instead of stock.

Maybe there’s no better example of a long shot than quantum companies building for an unknown future. 

On Monday, Trump signed two executive orders: one pushing for commercial quantum use by 2028, and the second requiring federal agencies to switch to quantum-resistant crypto by 2031. 

Last month, the government pledged US$2B to nine companies in the sector, including IBM ($IBM), D-Wave ($QBTS) and Rigetti ($RGTI). 

In this market, there are plenty of companies making unexpected pivots, with big capex bills tied to unproven outcomes and traditional valuation methods are hard to apply. Then again, asymmetric returns were built on that premise. 

This is not financial advice nor a recommendation to invest in any of the securities listed. The information presented is for general information purposes only and intended to be of a factual nature only. Past performance and forecasts are not a reliable indicator of future performance. The value of your investments can go down as well as up and you may receive back less than your original investment. The author of this article and other employees of Stakeshop Pty Ltd may hold positions or have financial interests in the company (or companies) discussed above. As always, do your own research and consider seeking financial, legal and taxation advice before investing.

Samy Sriram

Markets Analyst

Samy is a markets analyst at Stake, with seven years of experience in the world of investing, working across roles in private banking, venture capital and financial media. She has a Master’s degree in Finance and Data Analytics from The University of Sydney Business School.