SpaceX, Elon Musk’s conglomerate of space and AI companies, is set to be listed on the stock market on Friday, and it could make him the world’s first trillionaire.
But while it may look rosy for Musk, the stock itself has sent alarm bells around Wall Street due to the unprecedented valuation of the business and the way Musk has been able to demand special privileges for the listing.
Over half a billion shares are being put up for sale on Friday, at a sale price of $135 (£100) a piece, and with Musk already worth almost $800bn, the profits from the SpaceX listing could make him the world’s first trillionaire by the weekend.
The scale of the listing is also unprecedented. SpaceX is aiming for a valuation of $1.77 trillion. Only six companies in the S&P 500 are currently worth more, with Nvidia at the top at $5.2 trillion.
Why is SpaceX going public?
Musk has claimed he is taking SpaceX public by listing the company on the stock market in order to raise funds for SpaceX’s extremely ambitious goals.
Among SpaceX’s dreams is establishing a million-person colony on Mars.
But in the short term, Musk has said the funding will be used to put 100,000 next-generation Starlink satellites into orbit.
These satellites will be faster versions of the current Starlink satellites and will expand and speed up their internet provider services.
Musk has also said he hopes to use the technology from the new satellites to eventually launch “data centres in space.”
He has these could be a “massive new growth base and you need capital for that,” but although data centres are the craze right now, the ability to host them in space has not yet been proven.
Why are some people unhappy?
Some big investors are unhappy.
Officials from pension funds for firefighters, teachers and other workers in California and New York sent a letter to SpaceX last month decrying some of the provisions in its IPO, including the “super voting shares,” mandatory arbitration of shareholder claims instead of the possibility of lawsuits and how much power Musk will hold over the company.
The stock is also viewed as a risky bet, but many risk-averse funds like pension funds may end up owning the stock anyway.
This is because SpaceX has negotiated its way into several indexes, like the popular Nasdaq, which recently changed its rules to allow some businesses to appear on its index as soon as they list on the stock market, rather than being forced to wait a year.
This means many pension funds, which hold index funds that automatically buy stocks after they get included in certain indexes, will end up with some SpaceX stock.
The popular S&P 500 has retained its one-year wait rule, and so SpaceX will not appear on its index for at least a year.
But there are risks, when Musk revealed the company’s finances earlier this year as part of the requirement of becoming a public business.
Analysts said the company’s space business was making less than expected, and its AI business was making a loss, something you would not expect from the largest stock listing ever.
Lots of people are going to get rich
While Musk’s trillionaire status is the headline part of SpaceX’s listing, many businesses and individuals will profit on Friday.
Most current and former SpaceX employees are expected to earn over a million dollars, with the top 400 of them expected to rake in over $100m.
Banks and brokerage firms are expected to rake in millions on the fees they get for handling stock transactions.
Musk has also set aside a larger percentage than normal for stocks to be bought by retail investors, i.e. the average person, but whether they will make any money is yet to be seen.
SpaceX isn’t the only colossal market debut investors are now bracing for. Earlier this week, Anthropic submitted a confidential filing with the US Securities and Exchange Commission to officially start its own IPO clock.
OpenAI has not yet reported filing the initial SEC paperwork, but an IPO from the ChatGPT maker is widely expected.
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