SpaceX shares jump 19% on debut after record $75B IPO
What's the story
Elon Musk's aerospace company, SpaceX, has made history with its record-breaking $75 billion initial public offering (IPO). The move not only transformed the start-up into one of the most valuable public companies in the world but also gave investors a 19% return. The successful listing made Musk the world's first trillionaire. On Friday, SpaceX shares opened at $150 per share and jumped as much as 31% above their offering price before closing up 19% at $160.95 per share.
Market impact
SpaceX becomes 6th-most-valuable public company
The surge in share price gave SpaceX a market capitalization of $2.2 trillion, making it the sixth-most-valuable public company on its first day of trading. The IPO drew over $350 billion in orders from institutional and retail investors, with retail traders alone accounting for more than $100 billion of demand, Bloomberg reported. However, many investors are skeptical about whether a company that has yet to turn a profit deserves such a high valuation.
Future prospects
Musk skeptical about company's success
Musk himself was skeptical about this monumental day for his company. "If people had told me this was going to happen, I was like, man you must be smoking some really good crack, because I think this company is going to fail," he said in a livestream on X (formerly Twitter). SpaceX's acquisition of Musk's xAI in February showed its commitment to artificial intelligence (AI), making the listing a referendum on the current leadership of the market and IPO prospects of competitors Anthropic PBC and OpenAI.
Market validation
Positive signs for other upcoming large IPOs
Robert Gruendyke, senior portfolio manager for the growth equity team at Allspring Global Investments, said SpaceX's successful IPO is a positive sign for other upcoming large IPOs. He said, "It should just make you optimistic for the markets, especially for growth stocks." However, Jim Chanos of Chanos & Co. warned against excessive optimism. He said historically massive IPOs relative to market size have been a reason to be more cautious or reduce risk.
Investor reaction
Retail investors show enthusiasm for SpaceX's debut
Despite skepticism from some investors, SpaceX's debut was met with enthusiasm from retail investors. According to a preliminary assessment by Vanda Research Ltd., SpaceX was the most bought stock by retail investors on Friday, with net purchases running at more than 3.5 times that of second-place NVIDIA Corp. However, Robinhood Markets Inc.'s customers faced issues during the first minutes of trading amid record-breaking traffic.