Elon Musk has never been a fan of convention, and his SpaceX IPO plans are no exception.
The aerospace to artificial intelligence conglomerate is preparing to woo retail investors on an unprecedented scale as it seeks a $2 trillion (£1.5 trillion) valuation that would make it the biggest IPO ever.
In a move reminiscent of the great British privatizations of the 1980s, SpaceX has set aside up to 30 percent of its shares for non-professional investors, rather than reserving the bulk of the offering to the city institutions and Wall Street heavyweights that typically dominate such deals. The company is betting that Musk’s loyal following will help it raise $75bn (£56bn) when it goes public later this year.
Details of a summer roadshow emerged this week after SpaceX informed the 21 banks tasked with handling the deal. The underwriting syndicate’s analysts will receive their first formal briefing on June 7, followed four days later by an event for 1,500 retail investors at a venue to be announced. The shares are also offered to investors in the UK, EU, Australia, Canada, Japan and South Korea.
SpaceX CFO Bret Johnsen reportedly told banks that retail investor participation would be greater than in any previous IPO, describing the company’s individual backers as people who have been “incredibly supportive of us and Elon for a long time.” The approach is reminiscent of the way Margaret Thatcher’s government sold British Telecom shares directly to ordinary savers in 1984, giving millions of people their first taste of share ownership.
Industry observers have compared the excitement surrounding the listing to the excitement that accompanied Google’s debut in 2004. The company’s implied valuation has risen sharply in recent months, rising from $1.25 trillion when SpaceX merged with Musk’s artificial intelligence company xAI in February, to $1.75 trillion a month ago and now to $2 trillion, according to Bloomberg.
Whether this number is justified remains the subject of heated debate. George Ferguson, senior analyst at Bloomberg Intelligence, noted that the only publicly available financial data is revenue, making accurate valuation difficult. He predicted $20 billion in revenue for SpaceX this year, but warned that xAI, which accounts for just $1 billion of that, is “currently a laggard in the AI race” and accounts for a significant portion of the overall valuation.
SpaceX had revenue of between $15 billion and $16 billion last year, with satellite broadband service Starlink and U.S. government defense and space contracts accounting for the lion’s share. A full prospectus is expected at the end of May. Investors then receive a first detailed insight into the company’s profitability.
Morgan Stanley, Bank of America, Citigroup, JP Morgan and Goldman Sachs are leading the fundraising, underscoring the scale of the deal.
Perhaps the most intriguing element of the investment case is Musk’s move away from his long-held goal of colonizing Mars toward a newer, arguably more commercial vision: data centers in space. Proponents argue that rotating facilities powered by a constant supply of solar energy could solve some of the terrestrial energy bottlenecks that the AI industry is struggling with.
However, the concept is still untested and the technological hurdles are enormous. Solar radiation, space debris, and the sheer difficulty of transporting and assembling data center components in orbit all present challenges that would likely require advanced robotic systems that do not yet exist. SpaceX’s new Starship rocket, billed as the world’s most powerful launch vehicle, is at the heart of the plan, although a test launch planned for this week has been pushed back to mid-May.
Ferguson adopted a cautious tone. The further space-based data centers are removed from commercial reality, the more the concept becomes a burden on the evaluation rather than influencing it.
For UK investors tempted by the hype, the message is clear: this will be an IPO like never before, but the gap between Musk’s soaring ambitions and proven financial performance remains significant. As with anything Musk-related, the potential benefits are enormous, but so are the risks.
