SpaceX’s IPO Poised for Record Debut
Fans of Elon Musk hoping to invest in SpaceX might find themselves disappointed this Friday. The rocket company is gearing up for a much-anticipated public debut, which is set to break records.
Initially, SpaceX aimed to raise $75 billion at a lofty valuation of $1.75 trillion. However, it’s reportedly received over $100 billion in orders from retail investors, as noted by an insider source.
The firm is likely to allocate at least 20% of its shares to individual investors. But, with so many orders, it seems most everyday investors may not get a chance, as large institutional buyers are expected to grab up shares. That substantial $100 billion figure includes investments from both domestic and international retail investors.
The specifics on how many shares will be available to individual buyers remain up in the air, as discussions are ongoing, according to various reports.
SpaceX has set its opening share price at $135 and plans to sell more than 555 million shares. This financial windfall is poised to eclipse the previous record held by Saudi Aramco, which raised $29.4 billion in 2019.
The overall IPO has received, astonishingly, four times more orders than available shares, a significant indicator of the demand.
Interestingly, some cryptocurrency traders are expressing optimism about SpaceX’s future. On platforms like HyperLiquid and Binance, futures contracts tied to SpaceX stock were trading at $165 as of Thursday morning. This translates to a valuation exceeding $2.2 trillion, surpassing the company’s launch targets.
However, some analysts caution against this enthusiasm, noting that the terms of SpaceX’s IPO don’t really reflect its actual financial health. At a $1.75 trillion valuation, the company’s price-to-earnings ratio could approach nearly 100, which feels stark compared to rivals like Nvidia, hovering around 20 to 25.
Last year alone, SpaceX reported losses of $4.9 billion on $18.7 billion in revenue, and the gap might widen, especially as Musk pursues ambitious projects like Mars colonization and advanced AI data centers in space.
Despite the heightened interest in the stock, some experts urge retail investors to tread carefully, especially during this initial trading frenzy. Analysts from Morningstar have expressed concerns, deeming SpaceX “significantly overvalued” with an actual worth estimated closer to $780 billion, which is about half of what it seeks from potential investors.
Data from the Wall Street Journal suggests that between 1980 and 2024, investors who purchased IPO stocks on their first day and held them for three years saw returns about 21% lower than those who chose a value-weighted market index.
Jim Chanos, a well-known short seller, has described SpaceX’s debut as an “IPO of dreams and hopes,” largely due to its questionable balance sheet.
SpaceX’s ventures aren’t limited to rocket launches. The company also boasts the Starlink satellite internet service, Musk’s AI firm xAI, and the social media platform X, which was formerly known as Twitter.
Other AI heavyweights like Anthropic and Sam Altman’s counterpart are also preparing for their public offerings, although the details regarding size and timing remain uncertain.
