After record IPO, Musk’s SpaceX faces next test in market debut

SpaceX is set to begin trading on Nasdaq on Friday, June 12, after investors poured $75 billion into the world’s biggest IPO ever, betting that Elon Musk’s lofty space, communications, and AI ambitions can justify a $1.77 trillion valuation.

The landmark listing cemented Musk’s status as the first trillionaire ever and propelled SpaceX into the ranks of the world’s most valuable companies — even though the firm posted a loss of nearly $5 billion last year and generated only a fraction of the revenue brought in by similarly valued tech giants.

“Investors will spend years debating whether the IPO price was too high or too low. I expect a lot of volatility in the next few months,” said Mike Alves, founder of VIDA Vision Fund, an investor in SpaceX.

The stock’s performance will also be a test for the so-called “Musk premium,” which has been the force behind Tesla’s $1 trillion-plus valuation, despite coming under pressure during Musk’s active role in President Donald Trump’s administration.

“We have to go back 100 years to get comparable entrepreneurs. He’s a visionary unlike others, and he executes extremely well,” said Joel Shulman, CEO of ERShares, which manages an ETF that has an exposure to SpaceX.

With SpaceX widely viewed as a dress rehearsal for a new generation of mega-listings, market participants will also be watching for signals on investor appetite ahead of forthcoming IPOs for AI heavyweights Anthropic and OpenAI.

Exchanges and underwriters are under pressure to demonstrate they can handle the listing’s extraordinary order volumes and avoid a repeat of the technical failures that marred Meta’s 2012 debut.

Shares will likely not trade until the middle of the trading day, as the exchange collects buy and sell orders and underwriters delay trading until supply and demand is balanced. SpaceX priced the IPO at $135 apiece and sold 555.56 million shares.

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.

World’s largest IPO

At $75 billion, the deal’s proceeds were more than double those of Saudi Aramco’s record-setting 2019 IPO. It is set to make SpaceX the first US trillion-dollar debut and the seventh-largest US company by market capitalization.

“Elon jokes that we make the impossible, we just make it late,” SpaceX Chief Operating Officer Gwynne Shotwell told CNBC in an interview.

The 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.

A $28.5-trillion market opportunity

For all the excitement surrounding the IPO, determining what SpaceX is actually worth remains a difficult valuation exercise.

SpaceX said its market opportunity spans $28.5 trillion, a figure it called the largest in human history. With its leading position in space — the firm says its operation is responsible for more than four-fifths of the mass launched into orbit over the past three years — and revenues from Starlink, some investors said it has a strong foundation upon which to build.

John Belton, portfolio manager at Gabelli Funds, said the best comparable to SpaceX is Musk’s electric vehicle company Tesla, as each has 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’ Blue Origin to accelerate the commercialization of space and pursue government contracts in a bid to unlock new markets beyond Earth. Morningstar analysts earlier this month said it is more fairly valued at around $780 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 and CIO of Laffer Tengler Investments. “If the stock drops to $100, that’s not ideal, but it wouldn’t change our long-term view. We want to participate.”

Shares of space companies rose in premarket trading, with Intuitive Machines, Planet Labs, and Satellogic up between 3.3% and 4.5%. – Rappler.com