SpaceX’s US$75 billion IPO has reshaped public markets, but with earnings looming and insider selling set to ramp up, questions are already building around its next phase.
After much anticipation, SpaceX made its public market debut on 12 June, ending its first day of trading up 19 per cent.
Raising US$75 billion, it is officially the largest public debut in history, surpassing Saudi Aramco’s US$25.6 billion in 2019 and Alibaba Group’s US$21.8 billion in 2014.
The rockets and AI giant began trading at US$150 per share, well above its IPO price of US$135, and climbed as high as US$175 during the session.
Ending the day at US$161 per share, that gave the company a value of US$2.1 trillion – higher than its target US$1.77 trillion – and also made founder Elon Musk the world’s first trillionaire.
Commenting on the IPO, Seraphim Space chief investment officer Mark Boggett said it represented a “landmark moment” for the space economy, further cementing space as a mainstream asset class and providing public markets with a high-profile benchmark for the sector’s potential.
“A SpaceX IPO has the potential to bring additional capital into the asset class, increasing participation from institutional investors, wealth managers, retail investors, and public market participants,” Boggett.
He noted there is already evidence of this trend in the emergence of dedicated space technology ETFs. Both Global X and Betashares have launched space ETFs in the Australian retail market over the past month, attracting strong inflows as investors rushed to gain exposure to the theme.
Boggett added that the IPO could lift visibility of opportunities in space investing beyond launch, noting much of future value creation is likely to come from applications, intelligence and infrastructure layers.
It comes as the listing coincided with an announcement from launch service provider Rocket Lab that it will be added to the Nasdaq 100 index on 22 June.
Although the stock has fallen about 10 per cent in recent days following the news, the company’s development has been viewed as symbolic for the space industry for some time, serving as a key reference point for public market exposure to the commercial space sector.
Questions ahead
On the other hand, some commentators, including Randmore Fund Management portfolio manager Sean Peche, have been more sceptical about the Musk-led company’s narrative, arguing that IPO timing at very high valuations can be destructive to wealth creation.
“The maths of overpaying for growth and quality can be very destructive to your wealth, as we’ve repeatedly seen in recent years. Stories are about the past, but it’s the future that kills you,” Peche said.
“Forecasting growth over five years is an impossible task and the growth rate usually falters for some unexpected reason at some point. When it does, the de-rating can often be worse than feared.”
Similarly, MAPFRE AM deputy director of investment strategy Ismael Garcia Puente added that questions remain around the company’s outlook, noting its core satellite-launch business remains the main revenue driver, while its technology and AI-related operations are still loss-making.
“We need to see how these segments evolve before we can assess their long-term profitability,” Garcia Puente warned.
Before the IPO, research house Morningstar scrutinised SpaceX’s IPO valuation target of $1.7 trillion, suggesting that Musk’s company is likely to be worth less than half of that at around US$780 billion.
Since then, the firm has said that the stock now faces hurdles ahead as investors assess whether it can justify its valuation and absorb selling from pre-IPO holders, which is expected to dwarf IPO issuance over time.
Morningstar equity analyst Nicolas Owens suggested that the company’s inaugural earnings report, expected in late July or early August, could be the first key test.
In a note, Owens said he will focus primarily on Starlink’s subscription growth rate and the level of R&D spending disclosed for Starship, which he said also offers an important window into Starlink’s commercialisation path.
Starlink is SpaceX’s global satellite internet service, while Starship is its powerful launch system designed for full and rapid reusability.
Owens also noted that soon after the earnings report, pre-IPO investors will be able to sell a large block of shares, accelerating a process that is typically restricted for 180 days but was altered in SpaceX’s case.
While he said index funds may help offset potential dilution from the rapid release of shares, he cautioned that volatility could still lie ahead.
“Investors in SpaceX should be aware that in the coming year, insider selling is very likely to greatly increase the supply of shares, so depending on the ongoing level of demand in the market, it could add to the volatility of SpaceX’s stock.”
Separately, there has been speculation about whether SpaceX could merge with Musk’s other major company, Tesla.
Morningstar analyst Seth Goldstein said the firm sees a “solid business case” for a merger or some other legal transaction structure combining the two companies.
Since both invest heavily in AI and in building out an AI supply chain, he argued there is potential for the two to become increasingly intertwined in the coming years.
At the same time, he remained sceptical about an immediate merger, arguing the two companies currently have different long-term objectives.
“Tesla aims to transition its business from primarily selling autos and batteries to selling autonomous driving software (for both Tesla owners and robotaxi customers) and humanoid robots. Though SpaceX could help Tesla with xAI and Starlink, the same outcomes could be achieved with joint ventures,” he explained.
But even with some doubts, Goldstein concluded that the research house “wouldn’t be surprised” to see a deal within a year of the IPO, given the speed at which Musk-led companies operate.
