SpaceX’s newly listed stock leapt on its first day of trading on Friday, after an initial public offering that shattered records and made CEO Elon Musk the world’s first trillionaire.
SpaceX stock, listed on the Nasdaq under the SPCX ticker, rose 19% on its first day of trading to close at $160.95. It became one of the world’s biggest listed companies on its first day on the market, valued above $2 trillion.
The company raised some $75 billion selling more than 555 million shares at its offer price of $135, making it the biggest IPO in history.
To punctuate the big day, SpaceX launched a rocket in Florida about an hour before the stock market opened. It was the 650th flight of a SpaceX Falcon 9 rocket, according to Spaceflight Now, delivering Starlink broadband satellites into orbit.
Musk was in Starbase, Texas, at the beggining of the day, behind what looked like a Nasdaq-branded podium, while a couple of SpaceX executives, including its President Gwynne Shotwell and Chief Financial Officer Bret Johnsen rang the opening bell in New York’s Nasdaq Stock Market.
“Whoever you are watching this, SpaceX wants to be able to take you to the moon, take you to mars, and ultimately beyond,” Musk said, noting it was hard to believe the company had just pulled off the biggest IPO ever.
“I gave SpaceX less than a 10% chance of succeeding at all, to be clear,” he said of the company’s early days. “In fact I told people this, I said ‘look, we’re probably going to fail, but you know we should give it a try because if we don’t, if there’s not a new company that enters space, we will never be a truly space-faring civilization.”
SpaceX is not short of ambition for how it will use the money it raised through the IPO. In a filing with the Securities and Exchange Commission, the company said it wants to expand its flagship rocket and satellite communications businesses, and is doubling down on a pivot toward artificial intelligence.
Earlier this year, it acquired Musk’s AI startup xAI. SpaceX has plans to expand its data centers on Earth, develop AI microchips and launch what it calls “orbital AI compute infrastructure” — data centers in space.
At the center of it all is Musk, who has an iron grip on the company as chairman of the board and chief executive officer. Musk also holds roughly 85% of shareholder voting power.
The company is not profitable, though. Its IPO prospectus reported a net loss of $4.3 billion in the first quarter of this year, and critics have questioned its stratospheric valuation. Morningstar valued it at just $780 billion based on a discounted cash flow model, a widely used approach to assessing the value of companies.
Morningstar analysts Nicolas Owens and Suryansh Sharma wrote that uncertainty is “very high” when it comes to SpaceX’s business, and its governance profile under Musk, who also runs Tesla and other companies, is complicated. “The company faces substantial risks related to strategic execution, technological evolution, market dynamics, regulations, AI buildout, and key-person dependency,” they wrote earlier this month.
First of 3 massive IPOs expected this year
The SpaceX IPO is the first of three big tests of investor appetite for AI-related technology companies. OpenAI, which makes ChatGPT, and Anthropic, creator of the Claude AI models, have both filed paperwork with the Securities and Exchange Commission signaling intent to list shares. Analysts say that could happen this fall.
All three companies are huge, and AI is taking the world by storm, but big question marks hang over future profitability. To date, they have been burning cash to develop artificial intelligence and subsidize usership.
Songyee Yoon, managing partner at Principal Venture Partners, a fund that focuses on AI, cautions that this is still a novel technology, and it’s not clear yet which companies will turn out the most commercial and useful models.
The introduction of such a new technology, she says, “comes with a lot of kind of frothy valuation and hype.”
Transcript:
MARY LOUISE KELLY, HOST:
Today, shares of SpaceX traded on the stock market for the first time. Elon Musk’s rocket company had a record-breaking initial public offering, and Elon Musk made a lot of money today. To make sense of it, we are joined by NPR’s Geoff Brumfiel, who covers space, and John Ruwitch, who covers tech. Hi, you two.
JOHN RUWITCH, BYLINE: Hey there.
GEOFF BRUMFIEL, BYLINE: To the moon, Mary Louise.
KELLY: I hope so. OK, so, John, kick us off. What more can you tell us about this IPO and SpaceX’s first day trading?
RUWITCH: Yeah. The IPO was the biggest in history. SpaceX raised $75 billion. That’s more than twice the previous record. And demand was high for the IPO. That was born out actually when it started trading on the NASDAQ today. The stock opened at $150, which was above expectations, rose to as high as 176 during the day, lost a little steam and ended just shy of $161. But the bottom line is that it was up over 19% on the day. A lot of early investors and employees in the company got rich today, or richer, including Elon Musk.
KELLY: Who is already incredibly insanely…
RUWITCH: Yes.
KELLY: …Rich. How much richer is Elon Musk at the end of today?
RUWITCH: Yeah, it’s hard to know exactly, but a little back of the envelope math, you know, Musk owns close to 40% of SpaceX’s shares. So his stake is now worth around $800 billion with a B. Plus, he owns a chunk of Tesla shares and has stakes in other companies. So he probably became the planet’s first trillionaire today.
KELLY: Holy cow. OK, this closing price has the value of SpaceX well above $2 trillion, trillion with a T. Geoff, you track SpaceX. Is it worth that much?
BRUMFIEL: I think even SpaceX’s supporters would tell you the business as it is today is not worth $2 trillion. According to the financial documents released ahead of the IPO, SpaceX is actually losing money. It lost $5 billion last year and another 4 billion in the first quarter of this year. A lot of those losses are due to the AI side of the business, which used to be Musk’s other company, xAI. It’s been burning cash at this incredible rate. It’s sort of a financial black hole, if you will. Even without the AI losses, though, the rocket and satellite company are probably worth far less, somewhere in the hundreds of billions of dollars.
RUWITCH: Yeah, just to add on to what Geoff is saying here, analysts at the investment research company Morningstar did a deep dive into SpaceX’s core businesses. They crunched some numbers around what they think is likely or probable at this moment in terms of the company achieving its goals in space and AI. And they think a fair value per share of this company is $63, which is a lot less than it is now.
KELLY: Yeah.
RUWITCH: Nicolas Owens is a financial analyst at Morningstar.
NICOLAS OWENS: I would argue that, for the next week, really what you’re looking at is simple supply and demand. Today, there’s limited supply and exuberant demand.
RUWITCH: Yeah, on the supply front, the company only floated about 4% of its outstanding shares, so not much. In terms of demand, there’s a lot of hype and excitement. But even for people who aren’t actively buying these shares, SpaceX is likely to end up in their portfolios because it’s being included in a few stock indexes earlier than normal.
KELLY: So, Geoff, back to you. What does the company need to do to actually meet these very high-flying expectations?
BRUMFIEL: Well, I mean, I think the company itself – I just want to read their mission statement in their documents, Mary Louise, because it really gives a sense of their ambition. Our mission is to build the systems and technologies necessary to make life multiplanetary, to understand the true value – or the true nature of the universe and to extend the light of consciousness to the stars. That might be worth $2 trillion.
KELLY: No big deal there. Yeah.
BRUMFIEL: Yeah, right, exactly. The first step to getting to that kind of evaluation is to build this giant rocket called Starship. Now, Starship is behind schedule. It’s costing the company billions to develop. But if it works, it will reduce the cost of sending things to space. Speaking at the opening bell today, SpaceX president Gwynne Shotwell sounded a defiant note as she addressed her employees. She said they’ve proven the skeptics wrong before.
(SOUNDBITE OF ARCHIVED RECORDING)
GWYNNE SHOTWELL: The thank yous go to all of you for hanging in there, for keeping a straight spine as the doubters doubt.
BRUMFIEL: But Starship is a lot more complicated than SpaceX’s other rockets. So for all these dreams to happen, it’s going to take a lot of work. I don’t think anyone’s ever been able to build a rocket quite like it. We’ll have to see what happens.
KELLY: Worth noting, today’s IPO is the first of several blockbuster IPOs we expect this year. Geoff, tell us about those.
BRUMFIEL: Yeah, that’s right. I mean, the other big two are Anthropic and OpenAI, the big AI companies. They’re each ballparked at around $1 trillion valuations. And like SpaceX, there’s a lot of fuzziness about how much they’re actually worth. A lot of this comes down to we don’t really know just how big the market is for AI or what it’s going to be used for. So, you know, a lot of this stuff is really betting on the future, I’d say.
KELLY: John, just to let you land us and circle back around to the possibly, as of today, trillionaire Elon Musk, I mean, we’ve talked a lot about that – just how much money that is, but how much more powerful is he as a result of this IPO?
RUWITCH: I think you could say a lot. You know, when companies go public like this and start selling shares to ordinary people, it usually means that those investors will be able to have more say in how a company’s run. But here, the investors will have very limited ability to check Musk. He has an iron grip on the company. You know, he’s CEO. He will control the board of directors. He holds more than 80% of the voting power of shareholders. You know, Elon Musk obviously has his fans. There are a lot of believers. There are a lot of people buying the stock today because they think his vision is brilliant, frankly. He’s highly controversial, also. And so I think today, he ends up more powerful in some ways than ever. And, you know, he’s really put himself at the center of his own universe.
KELLY: NPR’s John Ruwitch and Geoff Brumfiel, thanks to you both.
RUWITCH: You’re welcome.
BRUMFIEL: Thank you.
