Musk is preparing the “craziest IPO in history”! When SpaceX landed in the market, did US stocks move from “Mag7” to the “Great Eight Heroes” era?
The Zhitong Finance App learned that both large institutional investors on Wall Street and retail investors have welcomed news reports about a potential IPO being prepared by SpaceX, the superunicorn in space exploration with a valuation of up to 800 billion US dollars. If the largest IPO in history comes true, it will also help raise funds for SpaceX founder Elon Musk's ambition to land on Mars, and may cause the overall valuation of this rocket and satellite space exploration company to exceed 1 trillion US dollars, because some large institutional investors have been waiting for years to buy this company stocks.
People familiar with the matter told the media that SpaceX plans to raise more than 30 billion US dollars through an initial public offering that could be held as early as June next year.
Shay Boloor, chief market strategist at Futurum Equities Research, said in an interview with the media that although SpaceX focuses on a high-risk and capital-intensive business, retail investors' demand for its shares will be “very impressive.”
Needless to say, SpaceX's established and growing rocket launch business and Starlink (Starlink) business will greatly increase its IPO maturity; however, historical data shows that after IPOs, high-valuation companies often face market sell-off and poor actual stock price performance in the medium to long term.
“This is going to be the craziest IPO in the history of the global stock market. If its target valuation is $1.5 trillion, I wouldn't be surprised at all that it can quickly rise to over $2 trillion once listing and trading begins.” Boloor display.
People familiar with the matter said that SpaceX under Musk's leadership is teaming up with a major Wall Street investment bank to advance the IPO plan. The proposed capital will far exceed 30 billion US dollars, which is expected to become the largest listing scale in history.
On December 9, according to media reports, Musk's SpaceX plans to go public as early as mid-late 2026, and the financing will far exceed 30 billion US dollars. The report quoted information revealed by people familiar with the matter. The company's target valuation is about 1.5 trillion US dollars.
If SpaceX sells 5% of its shares as planned, the scale of capital raised will reach about 40 billion US dollars, far exceeding the world's largest IPO record set by Saudi Aramco at the time. Saudi Aramco raised US$29 billion in 2019, making it the world's largest IPO to date. Notably, Saudi Aramco only sold about 1.5% of its shares at the time, far below the circulation ratio of most listed companies.
SpaceX is expected to use part of the IPO to raise funds to develop a large-scale AI data center located in space, including the purchase of huge chip-based hardware required for operation. However, reports indicate that the launch time may be adjusted due to market conditions and other factors, and may be delayed until 2027.
According to reports, citing people familiar with the matter, SpaceX expects revenue of about 15 billion US dollars in 2025 and will increase to 22 billion to 24 billion US dollars in 2026. Most of this revenue comes from Starlink's Starlink business. The company's accelerated pace of listing is partly due to strong growth in Starlink satellite internet services, including prospects for direct-connected mobile businesses, and progress in the development of Starship rockets for lunar and Mars missions.
However, by reviewing large-scale IPOs in global stock markets over the past 40 years, we can find that emerging technology companies that are overvalued rarely bring lasting long-term investment returns.
Risk and drama
Investors and analysts generally said that SpaceX CEO, chief designer, and founder Musk's documented untraditional management style and aggressive anti-establishment rhetoric did not constitute a serious obstacle to valuation.
Among the five companies currently led by Musk, including infrastructure company The Boring Company and xAI, an artificial intelligence startup and owner of the X social platform (formerly Twitter), his management of the only listed company, Tesla (TSLA.US), a global electric vehicle leader, has always been full of civil fines and conflicts with regulators.
A US SEC official once called these government officials “bastards (bastards)” after he stripped him of his position as Tesla chairman and restricted his use of social media due to his 2018 tweet claiming that “funding has been secured (funding secured)” to privatize Tesla.
Musk is currently the richest person in the world, with a net worth of over 460 billion US dollars. Earlier this year, he threatened to leave Tesla if the board of directors did not approve an unprecedented 10-year super compensation plan totaling 1 trillion US dollars. In the end, this trillion-dollar salary was successfully implemented as expected by the market.
After Musk headed the Trump administration's “Department of Government Efficiency” (Department of Government Efficiency) for four months, Tesla's stock price and sales were severely hit as Trump annoyed American establishment elites and some extreme MAGA forces.
Christopher Marangi, value co-chief investment officer at Gamco Investors, a subsidiary of Mario Gabelli, said that an innovative CEO like Musk will undoubtedly bring risk and drama to a company. “However, these are also an inseparable part of investing in such companies, and dramatic returns are often sufficient to compensate for the risks faced by holders.”
Gamco gained exposure to SpaceX by investing in EchoStar, which included SpaceX shares as part of the deal in a September spectrum deal.
Marangi said it is “too speculative” to talk about whether Gamco will increase its stake in the SpaceX IPO, but “conceptually speaking, we would be very excited about the future of space-oriented technology companies.” He pointed out that GAMCO also holds TeleSAT shares.
“Meat quality and the hissing of sparks”
Dan Hanson, senior portfolio manager responsible for managing Neuberger Berman's $2.1 billion Quality Equity Fund, said that SpaceX's current strong operating conditions combined with future potential should attract significant investor interest in its unprecedented stock market IPO. By the end of November, about 5% of the fund's assets were unlisted shares of SpaceX.
“This is a rare situation where you can get both the real 'steak itself' (steak) 'and its 'tempting sizzle (sizzle)'.” He said in an interview.
Hanson said that although disruptive space theoretical projects such as sending humans to Mars may attract the interest of public investors, SpaceX's launch business and Starlink products are quite mature, which will help it obtain a more solid valuation than other space-based technology companies — which also means it is ready for an IPO.
Hanson said that the capital raised from the IPO may help SpaceX provide an important financial pillar for new technologies, such as the large-scale space AI data center Musk envisioned. Such data centers do not need to consume as much energy for cooling or electricity resources as terrestrial data centers.
James St Aubin, Chief Investment Officer of Ocean Park Asset Management, which does not own SpaceX shares, said, “In today's technological revolution, it has all the signs of being the darling of the market. The space exploration and commercial space services it provides have a 'blue-sky outlook (blue-sky outlook) '. This allows some aggressive investors to sidestep any concerns about the valuation level while allowing predictions about their growth prospects to run wild.”
St Aubin said that by 2026, investors may discuss the so-called “Great Eight (Great Eight)” on the basis of investments from the “Magnificent Seven (the Magnificent Seven, Mag 7)” tech giants including Nvidia and Google, plus SpaceX.
The so-called “seven tech giants”, or “Magnificent Seven,” which account for the high weight of the S&P 500 Index and the Nasdaq 100 Index (about 35%), include Apple, Microsoft, Google, Tesla, Nvidia, Amazon, and Facebook's parent company Meta Platforms. They are the core driving force of the S&P 500 Index to record high levels, and are also regarded by top Wall Street investment institutions as the combination most capable of bringing huge returns to investors in the context of the biggest technological transformation since the Internet era.
ChatGPT, which was heavily launched by OpenAI and is popular all over the world, has been making artificial intelligence the center of global economic growth for three years. During this period, there was a transaction. In a broader sense, a portfolio completely dominated the US stock market: buying the “seven tech giants.”
However, from index compilation, leading company performance/funding trends to media and buyers' statements, they all point to the same thing — the AI winner community is expanding from “core platform companies and AI GPUs” to “broader AI infrastructure+AI application software leaders”. Wall Street and the broader investment institutions' “AI investment portfolio” spillover from the “Big Seven Tech Giants” to the broader AI infrastructure (computing power/network/storage/cooling/cloud) and AI native application software camp shows that the “AI Winner Map” is being structurally expanded, and there are signs of sustainability.
As the AI boom begins to be bottlenecked by increasingly large-scale infrastructure and energy supplies, the next major leap forward in artificial intelligence may not take place on land, but in space — this is Elon Musk's latest grand vision on X.
“In sun-synchronous orbit with low latency, a localized AI computing satellite that only transmits the calculation results back will be the least expensive way to generate AI bitstreams within three years. Furthermore, since the Earth's existing electricity resources are already scarce, the pace of large-scale expansion within four years is also far ahead. Launching 1 million tonne satellites every year, each equipped with 100 kilowatts of power, can add 100 gigawatts of artificial intelligence computing capacity every year, without any operation or maintenance costs, and connect to the Starlink constellation through high-bandwidth lasers.”
“Further, it is possible to build a satellite factory on the moon and use mass drivers (electromagnetic orbital guns) to accelerate artificial intelligence satellites to the speed of escape to the moon without the need for rockets. This will enable AI computing power to reach more than 100 terawatts per year and push humanity to take an important step towards the Kardashev II civilization (Kardashev II civilization).” Musk wrote in a post on X.
The magic of overvaluation — high-valuation IPOs often lag behind the broader market
Looking back at the major IPOs over the past 40 years, we can see that highly valued upstarts rarely bring lasting investment returns.
According to statistics from Jay Ritter, professor emeritus at the University of Florida who focuses on IPOs, between 1980 and 2023, 45 companies had inflation-adjusted revenue of at least $100 million on the first day of listing, and their valuation exceeded 40 times their annual sales, yet only 7 companies were still trading at higher prices three years later.
On average, these stocks have evaporated about half of their market value since the closing price on the first day, and their performance is about 63% behind the broader stock market benchmark index.
Typical laggards include Beyond Meat, which debuted in 2019, Palm's listing in 2000, and Snowflake's major IPO in the US stock market in 2020. The stock prices of these companies were far lower than the IPO issuance price after a year of listing. Among them, Datadog and Zoom were both listed in 2019. These are a few companies that have had strong stock prices for a long time. Tesla, which was listed at a more moderate valuation in 2010, is a different kind. Over the past ten years, its stock price has far exceeded the IPO price.
“The extremely high valuations SpaceX can get today have really dampened some of the upside,” Ritter said. “Even if it were to grow into a superMac tech company with a market capitalization of around $2 trillion, that would be a return of only 100% to 200% for investors.”