For the majority of the last twenty years, SpaceX has been one of those businesses that almost no one could truly own but that everyone seemed to be aware of. On a phone screen, you could follow Elon Musk’s plans for Mars, read about Falcon landings, and see Starlink dishes appear on suburban roofs. However, purchasing a portion of it required a pre-IPO fund, a wealthy friend, or a contact list that most people don’t have. In June, that is altered.
With a valuation that has been subtly increased from $1.75 trillion in previous filings to figures currently hovering around $2 trillion in newsroom discussions, SpaceX is on its way to what appears to be the biggest stock listing in history. Speaking with people in the finance industry these days gives me the impression that no one really knows what to do with a figure that large. The Saudi Aramco listing is dwarfed. On the first day, it would land somewhere close to the top of the entire S&P 500.
Some of the early investors’ actions reveal more about the current state of affairs than any valuation chart. The New York Post was informed by an early investor who invested almost twenty years ago that the IPO would increase her wealth by about twenty times. In order to avoid paying New York taxes, she sold her Manhattan apartment, hired someone to manage a recently established family business, and began looking at homes in Palm Beach. “I didn’t think I’d be a billionaire,” she replied. It’s the kind of boundary that falls between silent calculation and incredulity.
That is not an uncommon tale. According to 137 Ventures partner Justin Fishner-Wolfson, his company’s exposure to SpaceX will surpass $10 billion on the open market. It’s worth noting that the first fund raised by San Francisco-based 137 Ventures in 2010 was only $50 million. In addition to being a reminder of how venture timing operates, the math is astounding. For years, the majority of the checks you write go unnoticed, but every now and then one of them becomes something that can be used to fund the subsequent round of bets.
Odd places are being affected by the cultural ripple. Cindy Scholz, who founded Compass’s Family Office Division and works with a number of SpaceX investors, reports that her clients are already establishing trusts, constructing real estate holdings in several states, employing private security firms, and discreetly interviewing chiefs of staff to handle their household payrolls. The number of family offices has increased by 25% in the last five years and is set to rise significantly.
It’s difficult to ignore how the language surrounding the IPO sounds more like a generational event than a financial one. It is frequently compared by analysts to the 2002 PayPal sale, which gave rise to a network of founders who went on to create Palantir, LinkedIn, Tesla, and YouTube. There is already a “SpaceX mafia,” according to MarketWatch.
There are workarounds for the remainder of the market. In 2015, Alphabet paid $900 million for what is currently thought to be a 6% share in SpaceX. If Alphabet ever decided to sell, that position alone would be worth more than $100 billion at a valuation of $1.75 trillion. Though it’s important to keep in mind that 6% of anything inside a $4.9 trillion parent company gets a little lost in the noise, The Motley Fool has been pushing Alphabet as a sort of backdoor SpaceX play, which feels largely correct. It’s similar to purchasing a steakhouse for the wine list when you own Alphabet for the SpaceX exposure.
Naturally, there are skeptics. With a $2 trillion debut, SpaceX must deliver Starship economics that work, Starlink growth that holds, and a defense business that continues to grow. The company has never released audited public financials. Once shares actually trade, markets have discovered—sometimes painfully—that scarcity premiums diminish. Despite yearly revenue of only $71 million, AST SpaceMobile, which is frequently positioned as a SpaceX competitor, has surged 6,000% on retail enthusiasm. This says less about AST and more about how desperate investors have become to wager on space. Nobody is certain yet whether the SpaceX listing will finally satiate that hunger or reward it. June will reveal.
