SpaceX achieved the largest stock market debut in history on Friday, ending nearly 25 years as a private company. With a valuation of $1.77 trillion, the initial public offering is poised to make CEO Elon Musk the world's first trillionaire.
A Historic Moment for SpaceX
"It is certainly hard to believe that a little company that started in a warehouse in El Segundo is now going public with the largest IPO ever," Musk said during an address at SpaceX headquarters. He reiterated the company's mission to "make humanity multiplanetary" and "take the fiction out of science fiction."
Executives rang the opening bell as Elton John's "Rocket Man" played on the floor of the Nasdaq exchange. "Today, we make history again. We have a history of making history," said SpaceX president Gwynne Shotwell from the exchange building.
Musk's Trillionaire Status
Musk, SpaceX's founder and majority shareholder, holds a large stake in the company. If investor enthusiasm validates the eye-popping valuation during Friday trading, he is likely to claim the title of the world's first-ever trillionaire. Musk also serves as CEO of Tesla, valued at $1.2 trillion, with his stake in the EV maker worth approximately $300 billion.
AI Boom and IPO Landscape
SpaceX's IPO arrives in what is predicted to be a banner year for public offerings of artificial intelligence companies. The rocket maker is part of this group as the acquirer of Musk's AI startup, xAI. Rivals OpenAI and Anthropic have also filed to go public this year and are predicted to raise record sums nearing $1 trillion, which would heavily orient the US stock market toward AI companies.
Mission and Financials
Musk has stated that SpaceX's decision to go public and raise enormous sums is to obtain capital necessary for further space exploration and creating human colonies on other planets. "Our mission is to build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe, and to extend the light of consciousness to the stars," SpaceX said in its investor prospectus.
SpaceX is a conglomeration of several of Musk's businesses, including satellite maker and internet service provider Starlink, xAI, social media platform X, and the SpaceX rocket business. Despite its expansive reach, the company is not profitable. Last year, SpaceX generated revenue of $18.7 billion while recording an operating loss of $4.3 billion. For comparison, social media company Meta generated over $200 billion in revenue last year with a net income exceeding $60 billion.
Unusual IPO Terms
SpaceX's highly anticipated IPO comes with an unusual set of terms. The company offered an accept-it-or-leave-it share price of $135 instead of providing the customary range of prices to investors. Buy-in has largely been based on investor enthusiasm at that set price rather than demand based on an array of prices. SpaceX reportedly stopped taking orders on Wednesday.
Earlier this week, reports indicated that investor demand was up to four times oversubscribed, meaning the $75 billion SpaceX sought to raise could jump to $250 billion in investment. This drew criticism from Massachusetts Senator Elizabeth Warren, who called on the Securities and Exchange Commission to delay the IPO over potentially "inaccurate or misleading accounting or valuation."
Risks and Market Impact
SpaceX's IPO has market watchers on high alert. Along with the lack of profitability, some analysts say such a high valuation for a company burning cash on its AI buildout—xAI is spending heavily on data centers—and predominantly governed by one person—Musk commands roughly 85% of SpaceX's voting shares—potentially makes for a volatile asset.
The company's Wall Street debut could also bolster its grip on the financial system. Its shares will reportedly be distributed into index funds shortly after the IPO, far quicker than most companies going public, though notably not into the S&P 500. These funds hold people's retirement savings and pension plans, meaning individual investors could be unwittingly exposed to financial risk if SpaceX's share price plummets.
Employee Windfall
For SpaceX employees, however, the record-shattering valuation means they are about to become much richer. More than 4,400 current and former employees are expected to become millionaires with the IPO, according to the New York Times, with 400 of them each securing $100 million or more.
Broader Economic Implications
Gabriel Zucman, a French economist who studies extreme wealth, said the consolidated capital brought on by the SpaceX, OpenAI, and Anthropic IPOs could have profound effects on the economy and society, the likes of which haven't been seen since the last century. "There is a fundamental tension in democratic societies between extreme wealth ... and the very possibility of a well-functioning democracy," Zucman said. "After World War II, it looked like extreme wealth belonged to the past," but now, he said, "the AI boom is minting billionaires by the day" and the first trillionaires are coming into view.
