Anyone else looking at this spacex deal sideways? The thing that gets me is the fixed $135 price set before the roadshow even started. no range, no real bookbuilding, all price discovery dumped into the first print. combine that with a 30% retail tranche through Robinhood/Fidelity/Schwab and an aggressive index-inclusion push on a tiny float, and the whole structure sorta seems (/ obviousy is) engineered to manufacture demand rather than discover a price. Morningstar's at $780B against a ~$1.75T ask
Use of proceeds too... ~78% ($62.8B of ~$80B) is already spoken for (Valor, xAI/x corp creditors, EchoStar spectrum), leaving under $13–18B of fresh capital against a business burning $30B/yr on AI capex. then there's a $60B Cursor option timed to close 30 days post-IPO in newly issued stock (conveniently after the filings lock), financials retroactively recast to fold in xAI and X so the "track record" is not pure SpaceX, and 85% voting control on a 42% economic stake. All-primary, 366-day lockup on everyone, so the real test is the cliff a year out. am I missing the bull case here, or is this just Musk pricing it take-it-or-leave-it because the retail base lets him?
You were expecting Elon Musk to do something above board?
The exit liquidity is astounding. Biggest allocation of an IPO to retail ever, and I think I read it's something like 400 employees becoming centimillionaires and over 4,000 becoming millionaires? I could see the rationale for the company being valued in the 100s of billions easily but 1.75T seems a bit egregious. But I suppose if you consider that it also includes X and Xai, and the insane multiples being given to defense tech + AI, there's a case? Plus since it's joining Russell and NASDAQ almost immediately, there's going to be a good pop on list. Still... wouldn't want to own this thing when the lockups end.
Feels like the mega tech IPOs are a classic pump and dump case. Hype them to oblivion, create FOMO around retail, ‘force’ indices to add them allowing private investors to sell at massively overvalued prices while public investors (eg retail pensions etc) are left holding a pile of junk when the crash inevitably comes
If you acc have a really good profitable (in the future) business why IPO rn (when ur deeply in the red). There’s no dearth of privates who’d write blank cheques to these companies. why endure the whims and vol of public markets? Surely they know it likely a bubble and want to get out before it pops
I would agree with some of what you're talking about, particularly with respect to that being very typical behavior for blockbuster VC IPOs. But, in truth, SpaceX IS a one of a kind asset. As it's been said ad-nauseum - rockets are hard. This is the first commercial space company that's been a resounding success and has a dominant market lead with 80%+ of US launches and 50%+ globally. That lead's only going to grow because of the network effects and scale they are at compared to competitors + cumulative learning and self-improvement derived from their dominant position. They will get better faster than everyone BECAUSE they do so many more launches than everyone. Easily half if not more of the spacetech industry itself is wholly reliant on them to get their projects into space to begin with. This more or less means that they're critical infrastructure for an entire sector that's critical to defense and commercial industries as a whole, which would justify a much higher valuation multiple than if they were just another player vs a multitude of competitors in the space. So I disagree with the assertion that it's a "pile of junk".
It's just overpriced. That's not to say that there's no way for them to get to that valuation or go beyond it with time, I just don't think that it's there yet so I won't be buying the IPO, instead I've just been trading around the boost it's giving to others tangentially benefitting from it like RKLB. It's very probable that the company has a massive drawdown within the next year post-IPO given the number of unlocks coming and for how many employees it would be a significant liquidity event for. But that's not exactly unusual, nearly 100% of the largest companies in the world have at some point suffered a 50%+ drawdown - sometimes multiple - in their histories. Elon's other trillion dollar company Tesla has obviously had its fair share of bumpiness and most would argue it's still massively overvalued today.
Both Tesla and SpaceX are not just trading based on what they're doing today (electric car sales + commercial rocket launches) but because of what they also have working in the background - humanoid robotics and AI. If the growth of their core businesses continues to accelerate and can fund investment that results in the successful execution of their other business lines... it's not hard to see this becoming a multi-trillion dollar company in the next 3-5 years. How much of that upside you can actually capture just depends on when you decide to buy and if they can execute (and I'm not about to bet on the latter not happening given track record). Personally, if I see a drop of 25% or more, that's when I'll look at it more seriously. For now it's just a wait and see.
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