The enthusiasm among investors for the potential Initial Public Offering (IPO) of SpaceX is exceptionally high, as it would help fund Elon Musk’s Mars ambitions and could value the rocket and satellite company at more than $1 trillion.
According to Reuters, SpaceX is looking to raise more than $25 billion in an initial public offering that could come as early as June.
In this connection, Shay Boloor, chief market strategist for Futurum Equities Research said, “Though it is a high risk and capital-intensive business, the demand for shares from retail investors will be substantial.”
Potential key risks
The investors and analysts have potentially said that chief designer and founder Musk’s unconventional management style and counter-establishment discourse are not a deterrent.
In this connection, Christopher Marangi,-co-chief investment officer said, “The risks and drama an innovative CEO like Musk brings to a company are “part and parcel of being an investor in these types of companies.”
Substance and flair
According to senior portfolio manager Dan Hanson, Space X’s combination of strong current operations and future potential should captivate massive interest in an IPO.
While hypothetical projects like sending humans captivate media attention, Hanson said SpaceX’s launch business and Starlink Communications products are more entrenched and would help it to get a strong valuation, making it ready for an IPO.
Further, the proceedings showed that an IPO could help SpaceX fund new technologies like space-based data centers that would not require as much energy-consuming cooling as Earth-based centers.
Trailing the market
The major IPOs over the last four years exhibited that the richly valued newcomers lasted for a short period of time.
Data from Jay Ritter, a University of Florida professor emeritus who researches IPOs, showed that between 1980 and 2023, 45 companies went public with at least $100 million in adjusted revenues and valuations more than 40 times their annual sales.
In addition, further analysis showed that the extremely high valuation that SpaceX has been able to achieve will remove some potential for growth.
The consensus among investors is that the SpaceX IPO will be historic and highly rewarding for those involved.
