SpaceX poised for historic IPO debut valued at nearly $1.8 trillion

SpaceX is poised to make its debut on American public markets this Friday, marking what is anticipated to be the largest initial public offering in history. The Elon Musk-led aerospace giant is valued at nearly $1.8 trillion, translating to a share price of $135. This valuation places it ahead of Saudi Aramco, which entered the market in 2019 with a price of $1.7 trillion.

The listing coincides with a shifting landscape for other tech powerhouses. Artificial intelligence leaders OpenAI and Anthropic are also expected to go public soon. A recent regulatory shift by the Nasdaq stock exchange now permits individual investors to purchase shares in these entities within as little as 15 business days after their first trade. SpaceX has similarly lobbied for an expedited entry, and while Nasdaq adjusted its rules to allow inclusion in major indices after just 15 trading days, the S&P Dow Jones Indices maintained its traditional requirements for the S&P 500.

Despite the excitement among retail investors, who have placed orders totaling roughly $70 billion—oversubscribing the offering by up to four times—significant concerns have emerged regarding the company's valuation and governance. Analysts at MorningStar suggest the stock might be highly overvalued, estimating a fair price of $63 per share, which represents a 53 percent discount to the proposed IPO price.

These valuation worries extend directly to pension funds, which hold life savings for retired workers including teachers, firefighters, and police officers. On Wednesday, the North Carolina state treasurer announced that the state would not purchase a direct stake in SpaceX for its pension fund due to the high cost. Instead, the fund plans to gain exposure indirectly through broader index funds.

"We will ultimately participate in SpaceX through our index positions in our public equity," Treasurer Brad Briner stated to CNBC. This approach highlights a critical issue: many pension funds are obligated to buy stocks based on their weighting within an index, leaving consumers with little to no choice in whether to opt in or out of such investments.

Historically, a seasoning period was required to allow a company to prove its stability before entering major indices. SpaceX successfully secured a waiver for this waiting period, allowing it to join the Nasdaq-100 quickly. However, the absence of such a buffer for index funds means that investors are immediately exposed to the stock without a chance to verify its true market value. With SpaceX's valuation surpassing previous records, the lack of a cooling-off period raises questions about the potential risks to communities whose financial security is tied to these massive, high-speed launches into the public market.

Forced immediate acquisition of these companies could prove highly undesirable," warned Aleksander Tomic, associate dean for strategy, innovation and technology at Boston College, speaking to Al Jazeera. The structural implications are so significant that excluding a single company like SpaceX from an index would necessitate the creation of an entirely new fund, according to Tomic.

Colin Clark, lead adviser and director of business analytics at Northwestern Mutual, explained the contractual constraints facing fund managers. "If SpaceX enters the Nasdaq, these fund managers can't simply choose not to track it because they are contractually obligated to follow the index," Clark stated. He attributed the accelerated listing timeline to the Nasdaq platform itself, suggesting the exchange may be bending rules to permit an earlier-than-normal entry into the index system. These regulatory adjustments also pave the way for the anticipated initial public offerings of OpenAI and Anthropic. On Monday, OpenAI confidentially filed for an IPO, with reports indicating a target valuation of $1 trillion, while Anthropic filed its own IPO earlier in the month with similar expectations.

Governance concerns have emerged as SpaceX outlined its proposed corporate structure for the upcoming listing. This model grants Elon Musk outsized control, potentially weakening board accountability. Under the proposed framework, Musk would command up to 85 percent of voting power despite holding only 42 percent of equity. Thomas DiNapoli, New York State comptroller; Mark Levine, New York City comptroller; and Marcie Frost, CEO of the California Public Employees' Retirement System, highlighted the implications in a letter issued in May. They noted that removing the company's most powerful officer would require his own vote, effectively rendering him unfireable without his consent. The officials described this level of insulation from accountability as virtually unheard of among other large U.S. issuers.

This governance structure severely limits shareholders' ability to influence the company's direction. While boards theoretically possess the power to remove chief executives, the proposed structure makes it nearly impossible to do so against Musk's will. This dynamic mirrors a situation the Wall Street Journal reported Tesla explored last year, which the electric carmaker subsequently denied. Consequently, shareholders, including institutional investors managing funds for pension plans and individual investors, would struggle to remove Musk if he fails to meet his commitments.

Tomic of Boston College cautioned that SpaceX, along with potential listings for OpenAI and Anthropic, may be significantly overvalued. He emphasized that the newly waived Nasdaq rules, specifically the 15-day rule, do not allow sufficient time to assess an IPO's performance before it hits the market. This raises serious concerns about potential losses for pension funds, individual retirement accounts, and university endowments. SpaceX already holds direct exposure to major institutions; for instance, the University of North Carolina system has 10 percent of its endowment tied to SpaceX, alongside Washington University in St. Louis and Stanford University.

While Musk has outlined ambitious forward-looking plans for SpaceX, including large-scale investments in AI and constructing data centers in space, these promises are often overshadowed by a history of overpromising and underdelivering. A New York Times analysis revealed that Musk has fulfilled his promises only 19 percent of the time, based on approximately 600 commitments made. For example, his 2016 declaration that humans would be on Mars by 2025 did not materialize.

President Trump did not meet his 2025 pledge for full autonomy in Tesla's robotaxis by year's end. He also failed to execute his promised $2 trillion in federal budget reductions while heading the Department of Government Efficiency.

SpaceX reported a $4.9 billion loss last year despite generating $18 billion in revenue. This figure represents an increase from the previous year's $14 billion. Much of this financial growth stems from the rapid expansion of the Starlink satellite internet network.

Michael Monaghan, a portfolio manager at FounderETFs, told Al Jazeera that institutional investors focus on future earnings rather than past mistakes. "We look forward and ask what the company could earn," Monaghan explained. He noted that investors typically evaluate SpaceX over a two-to-three-year horizon.

Monaghan believes the company could achieve $50 billion in Starlink revenue and another $50 billion in defense contracts by 2030. Starlink currently serves over 10 million subscribers and contributes between 50 and 80 percent of total revenue.

The launch cadence is unmatched by any previous space program. SpaceX conducts rocket launches nearly every two days. The Falcon-9 rocket alone completed 165 launches last year. Monaghan also highlighted SpaceX's unique capability to build and supply a moonbase, a priority for the US Department of Defense.

Major financial institutions agree with this optimistic outlook. Morgan Stanley projects revenue could exceed $330 billion by 2030. Goldman Sachs estimates figures even higher, at $470 billion over the same period.

However, concerns persist regarding the AI sector's valuation. Clark warned that potential valuations in space companies remain open to interpretation as resource constraints and compute demands evolve. Weak performance in this tightly connected sector could drag down multiple stocks simultaneously.

"If that bubble does burst, that impacts companies down the line," Tomic said. "Consumers don't have a choice if this is a risk they want to take." Torsten Slok of Apollo Global Management added that the current market is more overvalued than during the 1990s IT bubble.

Key players in this ecosystem include Nvidia, which partners with OpenAI, SpaceX, and Anthropic. Microsoft invested in OpenAI and recently announced a partnership with SpaceX's Starlink. The top 10 holdings in the S&P 500 represent over 40 percent of the index's total weight. This concentration exists even before SpaceX, OpenAI, or Anthropic are officially included in the index.