To Infinity and Beyond!
By now, almost everyone on Earth and anyone on Mars is aware that SpaceX, Elon Musk’s extraordinary, extra-terrestrial company, joined the ranks of publicly traded companies on Friday, June 12 when it officially launched its IPO (Initial Public Offering) using the ticker symbol SPCX. And on that most auspicious day, it became the largest IPO in history with a pre-IPO market capitalization of $1.8 trillion (yes trillion), ending the day worth $2.1 trillion, making it the 6th most valuable company in the world.
The shares, which were priced to initial investors at $135 per share, began trading at $150 on Friday morning, going as high as $176, before closing at $160, up 19% on the day. The company sold only about 4% of its shares to the public, mostly allocated to institutional investors, with a smaller allocation to retail investors. The lion’s share of its stock is still held by Musk and others. Market capitalization represents the total value of a company and is calculated by multiplying the number of shares outstanding times the share price. It indicates how much it would cost to buy an entire company. In the case of SPCX, you would need $2.1 trillion.
SpaceX, the brainchild of Musk, was founded in 2002. Its main business is providing commercial rocket launch services, delivering satellite internet, and building artificial intelligence infrastructure. The company has grown from a private rocket manufacturer into a massive space conglomerate. SpaceX designs, builds, and launches advanced rockets and spacecrafts. It is famous for creating reusable rockets, which helps save money and increase how often they can fly.
Additionally, SpaceX owns Starlink, a network of thousands of small satellites in low-Earth orbit. This service sells high-speed broadband internet directly to consumers, businesses, and governments all over the world, especially in remote areas. Starlink is a major money-maker, bringing in a large portion of SpaceX's billions in annual revenue. SpaceX also absorbed Elon Musk's AI company, xAI. This includes the Grok AI model, the social media network X (formerly Twitter) and its orbital data centers. Investors value the company’s potential to provide AI services and data center computing capabilities directly from space.
For those feeling left out on SPCX’s big day, no worries. If you own a large-cap mutual fund, or ETF, you were likely a front row participant in Friday’s IPO. Your fund was allocated shares at the pre-IPO price, and if not, it bought shares later in the day or will do so soon. Rest easy, you already own it, or will soon own it, for better, or worse. Will SpaceX be a profitable investment over the long term? Only time will tell. Bear in mind that for everyone who bought shares in SPCX on Friday, someone else sold it. But if one were to ask Elon Musk, who’s now the world’s first trillionaire, he’d probably say “To Mars or Bust!”
Enjoy the ride.