SpaceX has set a fixed price of $135 per share for its initial public offering (IPO), aiming to raise $75 billion and achieve a valuation of $1.75 trillion. The company will begin trading on the Nasdaq on June 12, marking the largest IPO in history. The offering will sell 555.6 million shares, with Elon Musk retaining 82.4% of voting power and no plans to sell his own shares. The IPO includes provisions for retail investors, with up to 5% of shares reserved for employees and individuals through a direct share program.
Deeper Dive & Context
Unprecedented Approach
SpaceX’s decision to set a fixed price ahead of its roadshow, which begins June 5, diverges from traditional IPO practices. Companies typically offer a price range to gauge investor demand. Musk’s approach reflects his influence in reshaping financial conventions, with SpaceX’s valuation surpassing Tesla’s $1.6 trillion market cap and placing it among the top 10 most valuable U.S. firms.
Market Reactions & Risks
Analysts at Morningstar argue SpaceX is overvalued, estimating its fair value at $780 billion, roughly 48% below its private market valuation. They caution that the IPO may not be the best entry point for retail investors, citing $4.28 billion in net losses in the latest quarter. However, SpaceX’s Starlink division remains profitable, generating $3.26 billion in revenue in the latest quarter.
Index Inclusion & Investor Access
SpaceX could be added to the Nasdaq-100 index as early as July, under new rules allowing large companies to join after just 15 trading days. This could boost demand through ETFs like the Invesco QQQ Trust, which tracks the index. Meanwhile, some investors see the IPO as a high-risk opportunity, given the company’s lack of profitability and reliance on unproven technologies like Mars missions and AI data centers in space.
Musk’s Control & Future Plans
Musk will be required to hold his SpaceX shares for 366 days post-IPO, signaling long-term commitment. The IPO underscores Musk’s dominance in the tech and financial sectors, with his net worth estimated at $825 billion, including a $542 billion stake in SpaceX. The company’s governance structure ensures Musk maintains strong control over strategic decisions.