Elon Musk’s SpaceX has pulled off the biggest initial public offering (IPO) in US history, raising a staggering $75 billion and instantly becoming one of the most valuable companies in the world.
The rocket maker priced its shares at $135 each on Thursday, selling 555.56 million shares and reaching a valuation of $1.77 trillion. The blockbuster debut puts SpaceX among the largest publicly traded companies in America, ahead of corporate giants such as JPMorgan Chase, Berkshire Hathaway, Eli Lilly, Meta Platforms and even Musk’s own Tesla.
When trading begins on Nasdaq on Friday, SpaceX is expected to rank as the seventh-largest listed company in the United States. The only six US-listed giants ranking ahead of it by market capitalisation will be NVIDIA, Alphabet, Apple, Microsoft, Amazon, and Broadcom.
The company, formally known as Space Exploration Technologies Corp., has given the banks handling the IPO the option to purchase an additional 83.3 million shares at the same IPO price. If that option is fully used, the size of the offering would rise from $75 billion to about $86 billion.
Demand far exceeds supply
Interest in the IPO has been overwhelming. At its IPO price, SpaceX is valued at about $1.77 trillion. The valuation becomes even higher when employee stock options and restricted stock units are included. On a fully diluted basis, the company’s value rises to around $1.8 trillion, according to Bloomberg.
The offering has broken the previous global IPO record held by Saudi Aramco, which raised $25.6 billion during its 2019 market debut.
While Aramco’s inflation-adjusted IPO value was about $33.2 billion, SpaceX has more than doubled that figure. This makes its listing one of the most significant events Wall Street has ever seen. The company’s valuation could climb even higher if underwriters decide to sell additional shares within the next 30 days.
Musk’s SpaceX playbook
Instead of following Wall Street’s traditional playbook, Musk and SpaceX rewrote several of the rules. The company announced its IPO price while US markets were still open, something issuers rarely do because major news or market swings can affect investor sentiment during trading hours.
SpaceX informed investors of the final price shortly after a pricing meeting with bankers concluded. A formal filing was then submitted to the Securities and Exchange Commission, followed by a company press release roughly 30 minutes later.
Normally, companies wait until after markets close before announcing IPO pricing.
SpaceX also reserved an unusually large 30% of the offering for retail investors, giving everyday traders a much bigger slice than is typically seen in large public offerings.
Another unusual move was deciding on the IPO price before the traditional roadshow process, where companies and investors usually negotiate valuation and demand. Musk has also structured the company to maintain firm control after the listing. Even after the IPO, he will retain 82% of SpaceX’s voting power.
Retail investors join the frenzy
It wasn’t just Wall Street institutions that wanted in.
Individual investors showed tremendous interest in the offering, requesting well over $70 billion worth of SpaceX shares, according to people familiar with the demand.
The company also received orders from sovereign wealth funds and wealthy family offices. One family office alone reportedly asked for more than $1 billion worth of stock, according to WSJ.
Of course, investors in hot IPOs often place orders that are much larger than what they expect to receive. That’s because demand usually exceeds supply, and investors know they will likely be allocated only a portion of the shares they request.
SpaceX’s order book closed on Wednesday, and the banks managing the offering are now deciding how the shares will be distributed ahead of the company’s planned Nasdaq debut on Friday.
Musk, however, has made it clear from the beginning that he wants individual investors to have a much bigger role. The company is expected to allocate around 30% of the IPO shares to retail buyers, far more than what is typically seen in major public offerings.
Investors are betting on the future
SpaceX is not currently profitable. Yet investors have been willing to support a valuation of about $1.77 trillion because they are betting on the company’s long-term future.
A major part of that optimism is tied to SpaceX’s growing artificial intelligence ambitions. The company is basing much of its valuation on the potential of its young AI business, which investors believe could become a major growth engine in the years ahead.
The real test begins on Friday, when investors finally get their first chance to trade the stock and decide whether the hype surrounding Elon Musk’s latest venture can live up to its historic valuation.