SpaceX priced shares at $135 late Thursday afternoon and opened 11% higher, completing the biggest U.S. IPO in history. The company's current valuation would place it as over 5% of the S&P 500 index if included today. CEO Elon Musk stated ahead of the debut that he had given SpaceX "less than a 10% chance of succeeding at all," but believed the effort to create a "space-faring civilization" was worth the attempt. The IPO has sparked debate among analysts over its 90-times-sales valuation and long-term performance prospects.
SpaceX Prices Shares at $135 in Record U.S. IPO
SpaceX priced its initial public offering at $135 per share late Thursday afternoon. If SpaceX were included in the S&P 500 today, it would represent over 5% of the overall index based on its current valuation. The company opened trading 11% above its IPO price.
Elon Musk remarked ahead of the company's debut: "I gave SpaceX less than a 10% chance of succeeding at all to be clear," adding that it was worth the try to create a "space-faring civilization."
Analysts Question 90-Times-Sales Valuation
SpaceX entered its IPO trading at 90 times its sales — not profits, but sales. Adam Johnson, portfolio manager at the Bullseye American Ingenuity Fund, told Axios that this indicates a valuation divorced from underlying business fundamentals. Historically, the majority of companies that go public underperform the market in the first three years, according to analysis from University of Florida finance professor Jay Ritter.
The top performing companies in the S&P 500 are all trading at a premium to their underlying earnings, a dynamic exacerbated by euphoria around the AI boom. Isabelle Freidheim, founder at Athena Capital, told Axios: "Hype is a borrowing, if you will, in the short term against future performance, so some companies will repay it."
Lock-Up Period Allows Partial Sales After Next Earnings Report
Early investors may sell as much as 20% of their holdings as of the second full day of trading after the next earnings report. Anyone can sell 180 days post-IPO, except Elon Musk, who has to hold for 366 days.
Sarah Kunst of Cleo Capital told Axios: "The lock up ends fast, so once insiders can sell, we'll see who's left holding the bag." Demand for the stock is strong regardless of valuation.
FAQ
What price did SpaceX set for its IPO?
SpaceX priced its shares at $135 late Thursday afternoon in what became the biggest initial public offering in U.S. history. The stock opened 11% higher than the IPO price.
When can early SpaceX investors sell their shares?
Early investors may sell up to 20% of their holdings as of the second full day of trading after the next earnings report. All shareholders except Elon Musk can sell 180 days post-IPO. Musk must hold his shares for 366 days.
Why are analysts concerned about SpaceX's valuation?
SpaceX is trading at 90 times its sales, which Adam Johnson of the Bullseye American Ingenuity Fund described as divorced from underlying business fundamentals. University of Florida professor Jay Ritter's analysis shows that historically, the majority of companies that go public underperform the market in the first three years.
