It has actually happened: SpaceX has pulled off the biggest IPO in history. Elon Musk’s rocket, satellite, and AI company raised $75 billion in its initial public offering, shattering all previous records. Despite the lofty valuation, demand was enormous: the offering is reported to have been four times oversubscribed. The 555.6 million shares were priced at $135 each, according to a filing with the US Securities and Exchange Commission (SEC).

That translates into a valuation of around $1.77 trillion – catapulting SpaceX straight to the position of the world’s seventh most valuable company, behind chip foundry TSMC and just ahead of semiconductor giant Broadcom. In the process, it leapfrogs heavyweights such as banking giant JPMorgan, pharmaceutical group Eli Lilly – and Musk’s own electric car maker Tesla.

The scale of the record becomes clear in comparison with the previous front-runner: Saudi oil giant Aramco raised around $25.6 billion in its December 2019 IPO – a figure SpaceX has now nearly tripled. If the underwriting investment banks exercise the so-called greenshoe option within the next 30 days and sell additional shares after trading begins on Friday (ticker: SPCX, Nasdaq), the total proceeds could climb to as much as $86 billion – at a valuation of up to $1.78 trillion. The listing also puts Elon Musk himself within reach of a historic milestone: he could become the world’s first trillionaire.

Despite going public, Musk is not relinquishing control of the company: he retains 82 percent of the shares even after the IPO. The share allocation is also unusual – 30 percent of the stock was reserved for retail investors, an exceptionally high proportion for an offering of this magnitude.

$20 Billion Goes Toward Debt Repayment

A significant chunk of the fresh capital is already spoken for – and not for rockets or data centers: SpaceX must spend $20 billion to repay a bridge loan. The company took out the loan in March, after Musk folded his heavily indebted AI and social media businesses – xAI along with the platform X – into the group. The record IPO thus also serves to clean up the legacy of that merger.

The rest of the capital is earmarked for a new growth phase. “We’re embarking on a massive new growth phase and we need capital for that,” Musk said last week during an IPO roadshow event in conversation with JPMorgan CEO Jamie Dimon.

A Massive Bet on AI Infrastructure – All the Way Into Orbit

At its core, the IPO is a gigantic bet on AI infrastructure and enterprise applications. SpaceX plans to pour the money into projects ranging from AI data centers to new satellite constellations. Musk announced that “AI data centers in space” would be the next capital-intensive mega-project – in his view, the best way to overcome energy constraints on Earth. Just this week, he unveiled a sketch of the company’s first AI satellite with a 70-meter wingspan.

The orbital data centers are central to Musk’s narrative of a claimed $28.5 trillion addressable market – and to justifying the valuation. And that valuation is steep: SpaceX is loss-making and is valued at 92 times its annual revenue of $19 billion – by far the highest multiple among the world’s ten most valuable companies.

Accordingly, many analysts have voiced massive concerns: they point out that revenue lags far behind that of other tech giants and that a large part of the valuation rests on future promises that have yet to be delivered. Analysts at lead underwriter Goldman Sachs nonetheless forecast a hundredfold surge in AI revenues to $322 billion by 2030 – driven in part by enterprise applications built around the group’s AI models.

Starlink Carries the Revenue – the Imagination Comes From AI

Operationally, SpaceX stands on a dominant foundation: founded in 2002, the company rules the rocket launch business and, by its own account, has carried more than 80 percent of the world’s payload into orbit over the past three years. Most of its revenue, however, currently comes from its satellite internet service Starlink. The big hopes for the future – and thus a substantial part of the valuation – rest instead on the AI business built around its in-house xAI.

The growth story is not without risks: among the biggest challenges is the competition, above all Blue Origin, founded by Amazon founder Jeff Bezos, which is likewise pushing the commercialization of space and vying for lucrative government contracts.

(Not All) Index Providers Are Rolling Out the Red Carpet

The stock is also getting a tailwind from index providers. Nasdaq – which beat the New York Stock Exchange in the contest for the listing – has adopted “fast entry” rules that will lift SpaceX into the closely watched Nasdaq 100 after just 15 trading days. FTSE Russell went even further, shortening the window to five trading days, meaning SpaceX will be swept into the Russell 1000 and Russell 3000 almost immediately. For index funds and ETFs, that means they will have to buy the stock – regardless of the valuation.

One important door, however, remains closed for now: S&P Dow Jones Indices is declining to fast-track SpaceX into the S&P 500. The company does not meet the criteria of the world’s most important stock index, which requires, among other things, profitability – something the loss-making group has yet to demonstrate. The huge capital flows from S&P 500 index funds will therefore remain out of SpaceX’s reach for the time being.

The SpaceX IPO comes amid a turbulent week for US markets and a historic flood of share sales on Wall Street. Alphabet announced plans last week to raise more than $85 billion, while the two leading AI labs, Anthropic and OpenAI, are racing toward their own IPOs.

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