SpaceX Faces Largest IPO in History

Record Volume and High Valuation

If the placement goes through, SpaceX would surpass the previous record set by Saudi oil company Aramco in 2019, which raised 29.4 billion dollars in its IPO. According to a Reuters report on Tuesday, demand from investors for SpaceX shares already amounted to 250 billion dollars. Investment experts at Liechtenstein-based VP Bank comment that SpaceX combines, rather than a homogeneous business model, several segments with very different revenue logic.

In February of this year, SpaceX also acquired Elon Musk's AI company xAI for 250 billion dollars, which also includes the social network X, formerly Twitter. The AI from xAI is also used by Tesla, for example, and xAI has included the social network X, formerly Twitter, for a year. In the prospectus, SpaceX announced it would use the proceeds from the IPO to expand AI computing infrastructure, launch facilities and carrier rockets, as well as satellite constellations.

Power Concentration with Elon Musk

Elon Musk will continue to effectively control the company even after the IPO. Because Elon Musk receives nearly 94 percent of the B shares, he concentrates an exceptional amount of voting rights, allowing him to effectively control the corporation. Class A shares give investors one vote per share, while Class B shares give them ten votes per share. The SpaceX IPO will free up only about 5 percent of the company's shares for trading.

Musk's equity stake in SpaceX is likely to be worth approximately 866 billion dollars at the targeted issue price of 135 dollars per share. Since he additionally holds Tesla shares worth around 350 billion dollars, Musk could become the world's first dollar billionaire. There are also complex compensation plans: Musk receives one billion performance-based Class B shares if SpaceX achieves certain market capitalization targets and can establish "a permanent human colony on Mars with at least one million inhabitants." He receives an additional 302 million shares if, in addition to market value targets, he completes data centers in space that deliver 100 terawatts of computing power per year.

The IPO comes at a time when valuations in the technology sector are moving away from traditional metrics. Now the focus in the sector is shifting "from stable cash flows to uncertain future expectations." SpaceX stands as a prime example of this. Representatives of the financial institution Bantleon point out that the share of the technology and communications sectors in the US blue-chip index S&P 500 is now close to 50 percent. During the dotcom bubble, the corresponding figure was "only" 40 percent.

Warnings of Excesses

Investment experts at asset manager Feri comment on current valuations with a cautionary glance back at the late 1990s. During the New Economy boom, the mega-IPOs of the time were harbingers of the dotcom bubble bursting. Songyee Yoon, Managing Director of Principal Venture Partners, an AI-focused fund, spoke of a "sobering moment" with regard to the upcoming IPOs. Ethan Feller, equity strategist at Zacks Investment Research, said with reference to the investment volume: "There's just tons of money going into this".

Analysts suspect that Musk may be pursuing a merger of Tesla and SpaceX. Musk's corporate empire also includes the car company Tesla and the AI firm xAI. The valuation of SpaceX would catapult the company into the league of the ten most valuable listed corporations in the world.

Outlook: More Tech IPOs in Sight

On Friday, SpaceX goes public. SpaceX is to be traded on the Nasdaq technology exchange under the ticker symbol "SPCX". The transaction could bring SpaceX around 75 billion dollars. Other major AI companies are also on the verge of their own IPOs, according to analysts: these include the AI firms Anthropic and Open AI, which have also filed papers with the US securities regulator SEC and want to go public this year. Both could reach valuations of over one trillion dollars, according to analysts.

The total value of SpaceX would subsequently amount to around 1,800 billion dollars. SpaceX was the first company to successfully send rockets into space and controllably land and reuse parts of them back on Earth. Rodney Comegys, Chief Investment Officer and Head of Global Equity at Vanguard Capital Management, advises private investors to be cautious: "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". Angelo Bochanis, an employee at Renaissance Capital, said: "For a lot of people looking at this deal, whether you want to buy it or not is in part a bet on Elon Musk".

The Nasdaq and other index providers have already pledged to include SpaceX shares in their indices as quickly as possible. The Nasdaq Composite Index had lost 7.4 percent since its all-time high on June 1 as of Wednesday. The exact issue price for the SpaceX IPO is only expected late on Thursday evening, according to reports.