After record IPO, SpaceX faces test in market debut
Manya Saini, Echo Wang and Niket Nishant |
SpaceX is set to begin trading on Nasdaq after investors poured $US75 billion ($A106 billion) into the world’s biggest IPO ever, betting that Elon Musk’s lofty space, communications and AI ambitions can justify a $US1.77 trillion valuation.
The landmark listing cemented Musk’s status as the first trillionaire and propelled SpaceX into the ranks of the world’s most valuable companies – even though the firm posted a loss of nearly $US5 billion in 2025 and generated only a fraction of the revenue brought in by similarly valued tech giants.
The stock’s performance will be a test for the so-called “Musk premium”, which has been the force behind Tesla’s $US1 trillion-plus valuation.
It will also be closely watched for signals on investor appetite before IPOs for AI heavyweights Anthropic and OpenAI.
SpaceX priced the IPO at $US135 apiece and sold 555.56 million shares.
Its shares will likely not trade until the middle of the trading day on Friday.
The record IPO is a culmination of Musk’s long-held ambitions in space and technology, and has stood out for rewriting Wall Street’s IPO playbook and drawing legions of retail investors into the market.
At $US75 billion raised, the deal’s proceeds more than doubled that of Saudi Aramco, the previous record-holder, in its 2019 listing.
Its sale made SpaceX the first US trillion-dollar debut and seventh-largest US company by market capitalisation.
Its valuation could rise further should underwriters exercise their right to sell additional shares, a decision typically made within 30 days after the offering.
Although SpaceX may have to wait for entry into the S&P 500, its expected fast-track inclusion in the Nasdaq 100 will soon make it a major holding for passive funds and ETFs that track the index, creating a fresh source of demand for its shares.
It will take about a month before it gets added to that index under Nasdaq’s new fast-entry rules, as opposed to a typical wait of as much as a year.
Some analysts expect SpaceX’s debut to trigger a reshuffling of investor portfolios, creating selling pressure on other technology heavyweights as funds rotate into the stock.
The frenzied interest presented opportunity and peril, said Jay Woods, chief market strategist at Freedom Capital Markets, because some retail investors might chase the stock if they miss out on the IPO,
SpaceX set aside 30 per cent of the offering for retail investors to capitalise on Musk’s popularity with individuals who have helped drive massive gains in Tesla shares.
“Historically, those investors tend to be the most vulnerable if momentum reverses,” Woods said.
“I think there will be better opportunities to enter this name down the road.”
For all the excitement surrounding the IPO, determining what SpaceX is actually worth remains a difficult valuation exercise.
SpaceX said its market opportunity spanned $US28.5 trillion, and with its leading position in space and revenues from Starlink, some investors said it had a strong foundation on which to build.
John Belton, portfolio manager at Gabelli Funds, said the best comparable to SpaceX was Musk’s electric vehicle company Tesla, as each had an established business and “a moonshot opportunity on the other side”.
“For Tesla, that’s things like humanoid robotics and other future applications. For SpaceX, it’s the AI business,” he said.
The hurdles at its enormous valuation include efforts by rivals such as Jeff Bezos’s Blue Origin to accelerate the commercialisation of space.
Morningstar analysts in June said it was more fairly valued about $US780 billion, less than half of its opening market cap.
“This is not a name you’re buying based on fundamentals. For me, the analogy is Amazon. This was a company that changed the way we live,” said Nancy Tengler, CEO of Laffer Tengler Investments.
Reuters