SpaceX completes largest IPO in history and catapults Musk into the trillionaire club

For comparison: in the previous largest IPO, Saudi oil company Aramco (Saudi Aramco) raised a good 29 billion dollars in 2019. SpaceX debuted on the stock exchange as planned with a valuation of 1.77 trillion dollars and is from the outset worth more than, for example, the Facebook group Meta (Meta Platforms (ex Facebook)). With this valuation, SpaceX immediately ranks among the most valuable listed companies worldwide.

Elon Musk: First Trillionaire in History

Elon Musk becomes the first person with wealth exceeding one trillion dollars through the IPO—at least on paper, measured by the value of his shares in SpaceX and the electric car maker Tesla, which he also runs. Currently, for example, Bloomberg estimates his wealth at around 700 billion dollars. With a voting rights share of more than 80 percent, Musk will retain full control over SpaceX even after the IPO. The basis for this is shares with more voting rights. The tech billionaire has also promised not to sell any of his own shares in the first year after the IPO.

Demand for the shares was enormous. According to information from the financial service Bloomberg, retail investors placed orders totaling more than 100 billion dollars. In the SpaceX IPO, they were apparently allocated around a fifth of the nearly 555.6 million shares, as the "Wall Street Journal" reported. The share is usually between five and seven percent. The remaining shares went to institutional investors, including asset managers such as BlackRock, banks, hedge funds, and passive index funds.

Investor interest: Retail investors receive unusually large allocation

Unlike in many other IPOs, SpaceX set the issue price of 135 dollars in advance itself. Companies usually first name a range—and then determine the price based on investor interest. According to the securities regulator SEC, the company wants to issue more shares than originally planned because of the strong demand. SpaceX confirmed the sale of around 555.6 million shares at the issue price of 135 dollars on Thursday evening.

The shares issued, however, account for only just under five percent of all SpaceX shares. Employees of the company cannot sell their shares immediately, but only in stages over the coming months. Unlike in many other IPOs, SpaceX set the issue price of 135 dollars in advance itself, which is considered unusual.

With regard to inclusion in major stock indices, the picture is mixed. The index providers Nasdaq and FTSE Russell changed their rules for this at short notice; MSCI referred in May to rules introduced in 2007 for large IPOs. S&P Dow Jones, on the other hand, is holding firm and sticking to the rule that the stock can only enter the S&P 500 selection index after twelve months on the market. SpaceX will nevertheless be included in the Nasdaq 100 in the near term.

Economic situation: High valuation despite losses

Economically, SpaceX, despite the jubilation over the record IPO, is in a mixed position. Elon Musk's space company SpaceX generated less than 19 billion dollars in revenue last year and is deep in the red. Specifically, revenue was 18.67 billion dollars (a good 16 billion euros), while a loss of around 4.94 billion dollars was recorded. The valuation at the stock market debut is more than 90 times last year's revenue—and that is extraordinarily high. For the currently most valuable company, the nearly five-trillion-dollar chipmaker Nvidia, this figure is around 20; for Apple, it is around 10.

SpaceX's central cash cow is the Starlink satellite internet service. The lion's share of revenue—around eleven billion dollars—was generated last year by the Starlink satellite internet service. SpaceX launched around 9,600 satellites into orbit for this purpose. At the end of March, Starlink had a good ten million customers. Amazon is building a competing service, but has significantly fewer satellites. According to the prospectus, the company sees a total market of 1.6 trillion dollars for satellite connectivity alone—for all providers, however.

Business model: Starlink as the driving force

One reason for the loss is the high costs of developing the large Starship rocket. Because of billion-dollar investments in artificial intelligence, SpaceX most recently posted losses, however. Musk is planning, among other things, data centers in orbit—although it remains unclear whether this will work technically. The total market is estimated at more than 22 trillion dollars.

Financial experts have therefore warned investors of risks when buying shares. At an issue price of 135 dollars, SpaceX will be by far the most expensive company in the Nasdaq 100 measured by annual revenue. Shares in technology companies are generally characterized by high volatility. Markets are currently jittery—among other things because of the Iran war and the uncertainty about which companies will be winners and which losers in the AI boom.

Outlook: AI, Mars, and risks

Elon Musk, who founded the space startup in 2002, has always pursued ambitious goals. The tech billionaire's plan was to drastically lower the costs of rocket launches and eventually build a colony on Mars. But SpaceX succeeded in building cheaper rockets—and making them reusable as well, which reduced costs further. Especially since the end of the Space Shuttle program, SpaceX is currently practically indispensable for US spaceflight and the military. has concluded lucrative contracts with the US space agency NASA for its reusable launch vehicles.

A few months ago, Musk also had SpaceX take over his AI company xAI, in which the online platform X had previously been integrated. This bundles spaceflight, satellite internet, and AI infrastructure under one roof. At the electric car manufacturer Tesla, which he also runs, autonomous driving, for example, still does not work as he has promised over the past ten years. The success of the SpaceX IPO nonetheless increases the pressure on Musk to deliver on his other major projects as well.

Given the enormous demand, the valuation could rise further after trading begins. With proceeds of around 75 billion dollars at an issue price of 135 dollars, it is also the largest IPO ever. The company, headquartered in Texas, has thus set a milestone in the history of corporate finance—and Elon Musk, who holds more than 40 percent of the company, could thereby become the world's first trillionaire.