This Friday, SpaceX became the biggest IPO in history, easily surpassing the previous record.
The previous mark belonged to Saudi Aramco, Saudi Arabia’s state-owned energy company, which raised US$29 billion in 2019 — something around US$38 billion in inflation-adjusted values.
SpaceX raised about double that, which valued the company — which brings together rockets, satellites, artificial intelligence and social networking — at US$1.77 trillion, according to the price set for the IPO on Thursday. When the shares began trading on Friday, Elon Musk, the company’s CEO and already the richest man in the world, became the first trillionaire in history.
The stock market debut comes at a decisive moment. It serves as a test of investors’ confidence in Musk, who, among other promises, says he intends to use the company to take people to Mars. It also acts as a test of the market’s enthusiasm for artificial intelligence.
SpaceX has been directing increasing efforts towards the development of AI. In February, it purchased xAI, another company controlled by Musk. The company also closed an agreement this year to acquire Cursor, a programming startup assisted by artificial intelligence.
With OpenAI and Anthropic preparing for their own IPOs, SpaceX’s debut should act as a barometer for whether the AI boom can sustain investors’ lofty expectations.
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Jay Ritter, an IPO expert at the University of Florida, said the current valuations of SpaceX, Anthropic and OpenAI “are not based on the current profitability of these companies, or even their revenue, but on very optimistic — and not entirely implausible — scenarios of how they could become enormously profitable.”
SpaceX’s IPO price was set at $135 per share. At this level, the company’s offering is billions of dollars greater than the sum of all IPOs in 2023 and 2024, and almost equivalent to the total offerings made last year. The banks that coordinate the operation still have the option to sell another 83 million shares over the next month, which could further expand SpaceX’s funding.
Recent large IPOs have had mixed performances. Uber and Lyft went public in the spring of 2019 in anticipated offerings, but their shares suffered after their debut, raising questions about whether the stock market shared the enthusiasm that had driven their rapid rise in value as startups. Saudi Aramco’s record listing later that year exposed the size of the wealth generated by the oil industry at its peak.
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