The SpaceX IPO
Hello, I hope the summer is going great. My kids are getting out of school for the summer so at least someone’s happy.
History was made on Friday with the biggest IPO ever as SpaceX hit the market raising $75 billion. The stock launched at $135 and closed at $160.95 for the day, giving the company a valuation of about $2.1 trillion and making Elon the world’s first trillionaire.
“Hey Andrew, you’re really smart. What do I do about the SpaceX IPO?”
I got this question from a friend. He had been called by his banker with a message: “I think I can get you an allocation in SpaceX.”
A bunch of people got calls like that. There were 21 banks boosting the IPO. That’s just about all of them.
They did their job as the stock popped in the first day of trading.
It was a lot of work; the banks moved the IPO to Friday instead of the traditional Thursday to diminish the number of trading hours they would need to support the stock. Turns out that it’s tough to find $75 billion in demand for new shares.
To be clear, SpaceX is a tremendous company that will break new ground for years to come. Starlink is a great product, and SpaceX has surpassed every other company or government in launching rockets and satellites into space. But the valuation is . . . high. Analysts peg the objective value of SpaceX’s businesses at around $800 billion or so. Again, one of the greatest companies ever created. But well shy of the $2 trillion it’s now trading at.
So what happens next? No one knows. But SpaceX’s stock price pits the faith in one man, a compelling story of AI and rockets and connectivity, and the assembled might of America’s financial institutions vs. math, gravity and business physics. The banks are about to leave the field, having collected very significant underwriting fees. Many early investors and insiders have just cashed out.
Traditionally, if anyone is left holding the bag, it’s the retail investors, many of whom are piling into the stock right now.
We are living in one of the great investment bubbles in human history, this one fueled by AI. One can’t time the duration of a bubble. But tread carefully, as gravity tends to win out in the end, even if the business is rockets.
I discuss the SpaceX IPO, James Dolan and some listener questions on the podcast with Zach this week. To check out Forward Party candidates in your area, click here. To get a copy of “Hey Yang, Where’s My Thousand Bucks?” click here and use the code “UBIUBI” for 25% off. I’m doing a book talk in LA on July 22nd! For 3 months off your mobile bill with Noble Mobile, click here or email matt@noblemobile.com and use my name to switch or explore. Look up this summer.