SpaceX IPO makes Musk a paper trillionaire
Elon Musk's SpaceX company has floated on the Nasdaq stock exchange, with shares climbing more than 25% above the opening price. This makes Musk the
Elon Musk's SpaceX company has floated on the Nasdaq stock exchange, with shares climbing more than 25% above the opening price. This makes Musk the world's first paper trillionaire, at least by market capitalization. Elon Musk's SpaceX has made its stock market debut, with shares pushing well past their opening price of $135 (roughly €117) in the hours after the initial public offering (IPO) on the Nasdaq on Friday. The shares were hovering around the $173 mark shortly after 1 p.m. in New York (1700 GMT/UTC), a rise of almost 28%, equating to a market capitalization of around $2.26 trillion for the Texas-based space and satellite and broadband internet company. That valuation makes Musk the first person in history to hold a trillion-dollar fortune, at least in paper form — mainly through his stakes in SpaceX and electric carmaker Tesla. As of Friday afternoon, US business publication Forbes estimated Musk's updated net worth at around $1.1 trillion. Investors valued SpaceX, which made a loss last year, at roughly 100 times its annual revenue Image: STAR MAX/IPx/picture alliance How much did the record IPO raise?
SpaceX sold around 555.6 million shares at the issue price of $135, raising its target of $75 billion in the process. This was comfortably the most lucrative IPO in history, eclipsing the roughly $29 billion that Saudi Arabian oil giant Aramco raised in 2019. Musk had joined via videolink from a ceremonial bell-ringing at Starbase, the South Texas home of SpaceX, on Friday, saying the company was going public now because it needed money to fund goals like launching more satellites and even data centers into space. He reiterated his goal "to make life multi-planetary." "Not just a few astronauts, I mean literally you," Musk said. "Whoever you are watching this, SpaceX wants to be able to take you to the moon, take you to Mars, and ultimately beyond." SpaceX President and COO Gwynne Shotwell was at the IPO in New York City on Friday Image: Frank Franklin II/AP Photo/picture alliance How does SpaceX's market cap match its revenues and profits (or losses)? Not unlike Musk's other cash cow, Tesla, it's not immediately clear why SpaceX can command such a high valuation from investors.
The South African's own celebrity and success as a hype man, coupled with perceived potential in the company's future performance, play a larger part in the pricing than current fundamentals. A crowd gathered in Times Square amid the IPO Image: John Angelillo/UPI Photo/Newscom/picture alliance Last year, SpaceX's revenue was $18.7 billion, and it incurred a net loss of $4.9 billion on large investments in AI and other projects. Friday's market capitalization valuation, therefore, is well over a century of the company's current revenue. By comparison, struggling Volkswagen's market capitalization of €48.46 billion represents less than two months' of the carmaker's revenue. In other words, the Volkswagen Group generates more revenue in a fortnight than SpaceX does in a year — at a profit, not a loss — and yet it is perceived by investors to be worth more than 40 times less. As for profits, SpaceX has not recorded a net gain in any calendar year. But similar issues did little to slow the stratospheric rise in Tesla's shares in recent years.
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