SpaceX Set for Record $1.8 Trillion IPO Amid Valuation and Governance Concerns

SpaceX is set to debut on the US public market with a record $1.8 trillion IPO, valued at $135 per share, surpassing Saudi Aramco’s 2019 IPO. The company has allocated 20% of its shares to retail investors, drawing roughly $70 billion in orders, as reported by Reuters. However, concerns over potential overvaluation have been raised, with MorningStar analysts valuing SpaceX at $63 per share, a 53% discount from the IPO price.

Elon Musk is expected to control up to 85% of the voting power despite owning only 42% of the equity, sparking governance concerns among state-level fund managers. This structure limits board accountability and shareholder influence, as highlighted by critics including New York State Comptroller Thomas DiNapoli, New York City Comptroller Mark Levine, and Marcie Frost, CEO of the California Public Employees’ Retirement System.

The Nasdaq’s new rule change allowing mega cap companies like SpaceX to enter the index after just 15 trading days has set the stage for its potential listing on the Nasdaq-100, despite not meeting traditional profitability requirements. This move could force index fund managers to buy SpaceX stocks immediately, potentially exposing pension funds and individual retirement accounts to risk if the company’s valuation falters.

OpenAI and Anthropic, both aiming for $1 trillion valuations, are expected to follow suit with their IPOs soon. The interconnectivity of the AI sector raises concerns about a potential bubble, with experts like Aleksander Tomic warning of similarities to the 1990s IT bubble. Torsten Slok, Chief Economist at Apollo Global Management, notes that top tech companies in the S&P 500 are more overvalued now than in the 1990s.

Despite these concerns, supporters like Michael Monaghan, Partner Portfolio Manager at FounderETFs, predict strong long-term growth for SpaceX, citing its Starlink satellite network’s profitability and potential for $50 billion in revenue by 2030. Morgan Stanley and Goldman Sachs also project significant revenue growth for SpaceX by 2030, with estimates topping $330 billion and $470 billion, respectively.

The University of North Carolina, Washington University in St Louis, and Stanford University have notable exposures to SpaceX through their endowments, highlighting the broad potential impact of its IPO performance.