The Stock of the Century
Do you ever watch a TV series and they go back in time to build a story? Let me build one for you.
The year is 1964 and there is a lot of talk about a space stock. It's called COMSAT. COMSAT builds satellites. In June 1964, they go public.
The IPO raised nearly $200 million. It is the largest offering since Ford went public in 1956. Investors scrambled for shares. Brokers had to set strict limits on how many any one person could buy. Some people were buying it just for the stock certificate. The stock opened at $20, jumped to $27 on day one, and would eventually reach $87.
It was called "the stock of the century."
The excitement made sense at first. President Kennedy had signed the Communications Satellite Act two years earlier. The space race was real. COMSAT had already launched the first commercial communications satellite, Early Bird, into orbit. This was the future actually happening.
COMSAT is a case study in what happens when a great story meets investor enthusiasm. The company was real. The technology was real. But the price reflected something beyond the business — a narrative that outran realistic expectations. It reflected the feeling people had about space, about progress, about not wanting to miss out on something historic.
Does this sound familiar?
Today, SpaceX dominates headlines much the way COMSAT did 60 years ago. Investors who can't buy SpaceX directly are searching for any way to gain exposure. The story is compelling. The technology is real.
I'm not saying any of it is wrong. I'm not saying space isn't a legitimate long-term investment theme. It might be.
But sometimes the problem is what the story makes us willing to overlook. Can the company realistically deliver the returns investors are pricing in? There's often a gap between a great company and a great investment.
The people who bought COMSAT at $87 owned a piece of history. They also waited a very long time to see a return.
That's the challenge with investing in innovation. You can be right about the future and still overpay for it.
When the excitement winds down, what are you really holding?