The rocket, satellite and artificial intelligence company led by Elon Musk plans to raise $75 billion (€65 billion) by selling about 555.6 million shares at $135 a share.
This would make it the largest initial public offering (IPO) in history, breaking the previous record set by Saudi Aramco in 2019, when the oil giant went public and raised $26 billion.
The listing would immediately turn SpaceX into the seventh-largest publicly traded US company. Because only 4% of its equity will be on offer, the total valuation will be $1.8 trillion.
SpaceX wants to use the proceeds from the IPO to fund its ambitious projects such as setting up an AI data center in space and a mission to Mars.
sky-high ambitions
Founded in 2002, SpaceX has made significant advances in space technologies such as reusable rockets over the years, emerging as the world’s leading launch services provider.
The company’s ultimate goal is to colonize Mars and establish a civilization there.
Closer to Earth, SpaceX operates Starlink, a massive network of about 8,000 satellites that provides broadband Internet services to consumers, governments, and enterprise customers. Starlink is currently the company’s only profitable business.
Earlier this year, SpaceX expanded into artificial intelligence by merging with xAI, which Musk created in 2023 to challenge companies like ChatGPT-maker OpenAI and Anthropic.
Musk wants to establish giant AI data centers in space to harness solar power for energy and the cold vacuum of space for free cooling, which would allow the facilities to overcome the energy and cooling constraints faced on Earth.
Still a loss making company
In its IPO prospectusSpaceX claims a potential $28.5 trillion market for its offerings, saying it is in a unique position to offer integrated, space-based AI and Internet services.
Still, there are concerns about skyrocketing valuations, especially for a loss-making company.
Last year, SpaceX made $18.7 billion in revenue, but reported a net loss of $4.9 billion. The company has said that it does not expect to make profits in the near future. It also has a lot of debt – about $29 billion as of the end of March.
Given its financials, SpaceX would be valued at about 94 times its annual revenue, which is a huge premium over shares of highly profitable Big Tech firms like Apple, Alphabet or Nvidia.
After evaluating SpaceX’s finances, US-based financial services firm Morningstar has valued the company at $780 billion. – A huge discount from the IPO’s valuation of $1.8 trillion.
It added that the outlook for SpaceX is “very uncertain” and that success will depend on whether the company’s orbital AI platform works and provides meaningful operating cost advantages over terrestrial computing.
What’s behind the craze for SpaceX stock?
Investor interest – both retail and institutional – appears to be very high, with recent reports suggesting that the IPO has already been oversubscribed.
Many Musk supporters cite his vision for SpaceX and his success in building Tesla into a global auto and tech giant as reasons to buy.
According to financial services company Fidelity, most IPOs offer only about 5% to 10% of the total offering to retail investors. But SpaceX has set aside a larger portion of the shares — up to 30%, or $22.5 billion — for retail investors.
“Many retail investors are unaware that about 25% of IPOs decline on the first day of trading, and there are even bigger declines over the long term,” Jay Ritter, an IPO expert and professor of finance at the University of Florida, told DW.
“But institutions are willing to give higher valuations to SpaceX and larger AI companies because other tech companies have demonstrated the ability to grow and become highly profitable,” he said, pointing to Alphabet, Nvidia and some other companies whose annual after-tax profits exceed $100 billion a year.
“If they had not done that, there would have been a lot more concern about valuations,” Ritter underlined. “But these other companies, including Microsoft and Broadcom, went public at much lower valuations, and thus had greater potential for public market investors.”
The Nasdaq stock exchange also changed its rules in May to allow big newcomers like SpaceX to join its index within 15 trading days, down from the previous three months. The move means that passive investment funds tracking the Nasdaq 100 index will soon be required to buy SpaceX shares.
Musk has maintained tight control over the company
Experts have warned that SpaceX stock could be more volatile once trading begins, as the company is only making 4% of its equity available for the IPO.
The large number of institutional and retail investors chasing the limited supply of a stock can cause sharp price fluctuations.
Even after the IPO, Musk will maintain a strong hold on the company.
The billionaire currently owns an estimated 42% of SpaceX, but after the listing, a special dual-class share structure ensures he retains about 82% of the total voting power on the board, meaning no one can oust him.
The company also restricts shareholders’ ability to file class action lawsuits, requiring them to file cases in a special Texas business court. If a judge refuses, disputes go to private arbitration, a provision seen as severely limiting investors’ rights.
Morningstar warned that Musk’s dominance over SpaceX also presents a “key-person risk” and that minority shareholders would have limited ability to influence company decisions.
“This concentration of decision-making authority in a single individual creates governance risks that require careful consideration,” Morningstar said.
Edited by: Andreas Becker
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