SpaceX, the aerospace manufacturer and space transportation company founded by Elon Muskis on the brink of making history with its initial public offering (IPO). The company is aiming to raise a staggering $75 billion by selling over 555 million shares at an expected price of $135 each. This IPO could eclipse the current record holder, Saudi Aramcowhose 2019 listing netted $29.4 billion.
The listing price is expected to be revealed late Thursday, with the stock set to start trading publicly on Friday under the ticker SPCX. This IPO is not just a test of investor appetite for rocketry and artificial intelligence but also for Musk himself. The company’s listing prospectus reveals that Musk will retain a tight grip on SpaceX by controlling the board and holding more than 80% of stock voting power.
SpaceX IPO: A Test of Investor Appetite
The SpaceX IPO is as much a test of investor appetite for rocketry and artificial intelligence as it is for CEO Musk, analysts say. Angelo Bochanisan associate at Renaissance Capitalwhich tracks IPOs, noted that for many investors, buying into SpaceX is partly a bet on Elon Musk. Musk is one of the best-known figures in corporate America and has made Tesla the most valuable car company in the world. However, Bochanis also pointed out the potential risks associated with Musk’s near-total control over the company.
“There are a lot of people who are really sold on his vision and sold on his expertise running this company thus far,” said Bochanis. “There are also a lot of people concerned about the fact that, more than any listing ever, this is a company going public where Elon Musk has near-total say of how everything works. He has his hand in a lot of different jars. His attention is very much divided.”
The Impact of SpaceX’s IPO on the Market
The public listing of shares by SpaceX, along with those of Anthropic and OpenAIwill open up these companies to scrutiny that, as private firms, they have not yet faced. Listed companies are required to file public quarterly and annual financial reports, as well as other paperwork, giving investors a look under the hood. This process is a “sobering moment,” said Songyee Yoonmanaging partner at Principal Venture Partnersa fund that focuses on AI.
Early investors, like venture funds, buy into the possibilities and promise of startups and new technologies like AI. The public market places more value on profits and practical business models. At present, the public has limited ability to assess these companies’ profitability. “It is true that it’s a kind of technology with huge potential, but I think we have to also be grounded in thinking about what we can actually accomplish within reasonable means,” Yoon said.
The SpaceX listing comes at a time when stocks, led by tech companies, have been wobbling after huge run-ups amid mounting concerns about the return on investment for AI. By the closing bell on Wednesday, the Nasdaq composite had shed 7.4% since hitting an all-time high on June 1. The SpaceX IPO, along with those of Anthropic and OpenAI, could lead investors to shift large chunks of money away from other listed companies and into these new ones, potentially sparking market turbulence.
The Future of AI and Rocketry
At its targeted share price of $135, SpaceX’s valuation would reach around $1.75 trillionmaking it one of the 10 biggest listed companies on Earth. Analysts say Anthropic and OpenAI are likely to also list with valuations above $1 trillion each. The IPOs, in addition to enriching early investors, will infuse fresh cash into the companies. In its prospectus filed with the Securities and Exchange CommissionSpaceX said it will use the money for continued growth of its AI compute infrastructure, launch facilities and vehicles, and satellite constellations.
“There’s just tons of money going into this,” said Ethan Fellera stock strategist at Zacks Investment Researchabout AI. However, he pointed out that this level of investment is not guaranteed indefinitely. “What would ultimately make the market potentially go down is this liquidity stopping to flow into these things,” he said. Feller noted that two other factors could put a damper on the flow of money into AI: tougher future regulations for AI firms and higher interest rates prompted by rising inflation.
Once the stock begins to trade Friday, the listing price is only the starting point. It could soar higher or dip lower in the coming days. That’s why Rodney Comegyschief investment officer and head of global equity for Vanguard Capital Managementadvises caution for retail investors. “Investing in an IPO process can be highly speculative, and it’s really difficult to determine the path of an IPO on a given day,” he said. “Anybody who’s thinking about participating in SpaceX’s IPO, to do it only in a speculative way, it is really not the best way to do long-term investing.”
