Will Elon Musk take small investors to space? The SpaceX stock offering will bring a revolution

The initial public offering of SpaceX, Elon Musk's space industry tycoon, has the potential to outshine all previous stock exchange debuts, and the billionaire wants not only institutional giants, but also a large group of retail investors, to take part in the historic flight. An exceptionally large pool of assets is being prepared for them.

The largest debut in the history of the stock exchange

The company, which completed the acquisition of sister company xAI in February, is valued at $1.25 trillion post-merger. Bloomberg reports that SpaceX intends to raise approximately $75 billion at a valuation of $1.75 trillion. This would potentially catapult the private company straight onto the list of the world's most valuable companies, and the IPO itself would easily become the largest in history.

The offer would be almost three times larger than Saudi Aramco's 2019 debut ($26 billion) and more than four times larger than Visa's IPO in 2008.

Advertisement

Details of the planned stock exchange debut remain unclear because Musk decided on the so-called confidential submission of documents. This is a procedure usually reserved for smaller companies, allowing potential debutants to obtain feedback from the US Securities and Exchange Commission (SEC) before formally announcing specific plans.

Actions for the “street”. Musk plays by his own rules

However, one of the most interesting pieces of information emerging from the leaks is the planned exceptionally large allocation of shares for retail investors. Typically, 5% is reserved for this group. up to 10 percent shares, while the rest goes to institutional players such as investment banks.

According to unofficial information, Musk wants to make up to 30% available to individual investors. shares. The billionaire is counting on a powerful army of his supporters and family offices with large amounts of cash, which will want to take part in the largest stock exchange debut in history.

– The SpaceX IPO would be of great importance not only because of its scale, but also because of its availability – says Lale Akoner, global markets analyst at eToro. – If retail investors receive a significant allocation, it would represent a shift away from the standard institution-based model and give individuals direct exposure to the market, rather than pushing them towards complex private equity transactions.

Reuters reported that SpaceX took an unusual, very direct approach to selecting banks to support the debut, engaging a total of 21 institutions with specific geographic and client mandates. For example, Bank of America will distribute to wealthy individual clients, Morgan Stanley will serve small retail investors, and UBS will serve high-net-worth foreign investors. Regionally, Barclays will be responsible for the British market, Deutsche Bank for Germany, and Royal Bank of Canada for the Canadian market.

Proprietary chips and AI: the answer to the power of Nvidia

The public offering comes at a crucial time for SpaceX. The merger with xAI, announced just before the IPO plans, created a combined entity operating in the space and artificial intelligence sectors, which may prove extremely tempting for investors.

Joseph Alagna, partner and founder of Buttonwood Funds, notes that Musk's recent announcement of the $25 billion Terafab chip project went almost unnoticed. At the end of March, the world's richest man revealed plans to build a massive factory in Austin, Texas. The world's largest semiconductor plant could produce millions of chips a year, as well as solar-powered artificial intelligence satellites.

The combination of dominance in the satellite market, powerful infrastructure and AI would be a real breakthrough for the company, especially since – as Alagna emphasizes – SpaceX would no longer be dependent on chips from rivals such as Nvidia.

– By combining artificial intelligence, space and infrastructure, Musk has built a moat around himself that makes it extremely difficult for any other company to become a real competitor to him – says Alagna. – He has built such an ecosystem that, in my opinion, no one will be able to match him.

An energy injection for Wall Street

The potential IPO is important not only in terms of SpaceX's capital needs, but it would also provide a huge boost to the US market, which has been struggling since a sharp slowdown in 2022. While Wall Street is performing noticeably better than the London Stock Exchange and other European markets, the overall appeal of public markets has faded somewhat.

This debut will also be crucial for investors themselves. Even though a $1.75 trillion valuation may seem astronomical relative to SpaceX's revenues (estimated at around $16 billion), the belief is that the market simply won't be able to resist the opportunity.

– Investors hope that SpaceX will be the next company after Nvidia whose shares will go into space – sums up Dan Coatsworth, market director at AJ Bell. – Expectations regarding both results and valuation are reaching their zenith.