Brace yourselves, because the stock market is heading for what could be the largest initial public offering in history.
The company is Elon Musk’s SpaceX. Some reports suggest it could float on June 20, although nothing is confirmed yet. Whatever the timing, it will be huge.
Estimates put the valuation somewhere between $1.75 trillion and $2 trillion. That’s slightly above the Saudi Aramco IPO, which came in at roughly $1.7 trillion to $1.87 trillion.
Put another way, the flotation would value the company at roughly the size of the entire GDP of countries such as South Korea or Spain.
In the Nasdaq 100 index, only six companies sit above it in valuation: Nvidia, Alphabet, Apple, Microsoft, Amazon and Broadcom.
While Aramco raised a then-record $29.4 billion, SpaceX is reportedly targeting as much as $75 billion.
However you look at it, this is a very big deal.
SpaceX has been privately owned since launch in 2002, with funding coming from venture capital, private equity and strategic investors, including stakes held by major investment funds. The transition to public markets should open the door to a much broader base of investors.
Josh Gilbert, market analyst at trading platform eToro, says the IPO represents a watershed moment not just for SpaceX but for global markets generally. And it’s an exciting moment for ordinary investors too. “SpaceX is expected to allocate a significant portion of shares to retail investors, potentially up to 30 per cent.”
Many will be keen to get in at the start. But they don’t have to wait, because it’s already possible to gain exposure today.
Space is the investment theme of the year. The global space technology market is now worth $650 billion, spanning 10,000 companies, and is forecast to hit $1.1 trillion by 2034, according to Fortune Business Insights. Exchange-traded funds (ETFs) and investment trusts targeting it have been flying.
The Seraphim Space Investment Trust, the world’s first dedicated space tech fund, is up a remarkable 260 per cent over 12 months, making it one of the best-performing trusts on the London Stock Exchange.
Chief executive Mark Boggett says the commercial space sector was originally seen as a “long-duration, capex-heavy theme”.
“Today, it’s a revenue-generating infrastructure story, driven by plunging launch costs, the proliferation of satellites, and growing end-market demand from defence, climate, telecoms and data analytics.”
SpaceX has been central to that shift, pioneering reusable launch systems and lowering barriers to entry. “The upcoming IPO has sharpened focus on the scarcity of listed exposure to scaled space assets," Mr Boggett says.
Last year, the US technology stock boom looked like it was running out of steam, as higher interest rates squeezed valuations and investors rotated into other sectors. Lately, though, there has been a renewed surge, with the S&P 500 pushing back towards record highs. SpaceX anticipation has helped.
Market event of a decade
The listing is one of the most anticipated market events of the decade but investors don’t have to wait, says Chris Beauchamp, chief market analyst at IG. “There are already several ways to gain exposure, whether indirectly through public markets or more directly via pre-IPO pricing.”
One of the simplest routes is through London-listed investment trusts such as Scottish Mortgage Investment Trust, Baillie Gifford US Growth Trust and Edinburgh Worldwide Trust, which all hold significant stakes in SpaceX.
These trusts offer indirect exposure to SpaceX, alongside a broader portfolio of innovative companies, Mr Beauchamp says. “The trade-off is that SpaceX is just one component, so its impact on returns is diluted.”
At Scottish Mortgage, for example, it accounts for 19.3 per cent of assets, and 14.9 per cent at Baillie Gifford US Growth.
Investors should check what else they’re buying alongside SpaceX. For example, Scottish Mortgage’s top 10 holdings also include Taiwan Semiconductor Manufacturing Company, ByteDance, MercadoLibre, Amazon, Nvidia and Meta Platforms. They’re top companies, but there’s also a danger investors end up buying even more of what they already have, adding to their tech concentration risk.
Disruptive tech specialist fund manager Cathie Wood holds SpaceX in her ARK Venture Fund. It’s roughly around 18 per cent of the fund’s total net assets. RShares Private-Public Crossover ETF and KraneShares AI & Technology ETF also hold the stock.
Mr Beauchamp says another option is to buy listed companies that hold stakes in SpaceX. Google-owner Alphabet, for example, owns a slice worth around $900 million, although that’s tiny given its $4.7 trillion market cap.
Alternatively, investors can target defence and aerospace giants such as Northrop Grumman and Lockheed Martin, which supply technology and infrastructure that supports space exploration.
Satellite and imaging companies such as Maxar Technologies and Teledyne Technologies offer more targeted exposure to the commercialisation of space, Mr Beauchamp added.
More sophisticated investors can also trade expectations via grey market pricing platforms, taking positions on what valuation SpaceX might achieve at listing.
Dan Coatsworth, head of markets at AJ Bell, says the IPO is the defining story of the modern space economy. “It is already bringing down the cost of space activity and generating revenue, so it’s not just another pie-in-the-sky business.”
He describes SpaceX as a next-generation infrastructure and services provider redefining the space economy. “Its business model is focused on reducing the cost of getting satellites, cargo and humans into space, and then using its own fleet of satellites to provide communication services and potentially data centres in the future.”
There is no other company doing what SpaceX does on the same scale, meaning it could justify a scarcity premium. But Mr Coatsworth also warns investors not to get carried away.
“Retail investors may be salivating at the prospect of buying shares, and there is a queue of index funds waiting to invest. But there will also be early investors sitting on significant gains looking to cash out early, and that can create volatility.”
To gauge the risk, investors must check the rules around lock-up periods, that prevent pre-IPO investors from selling out soon after listing.
Longer term threats include launch failures, regulatory changes, competition catching up, reputational damage linked to Elon Musk, and execution risk around ambitious projects such as AI integration and space-based infrastructure.
SpaceX has mighty ambitions, but that means it may need to come back to raise further funds, risking potential dilution for shareholders, Mr Coatsworth adds.
While the IPO is aiming for the stars, there is still a danger that Elon Musk and SpaceX end up flying too close to the sun, bringing investors down to earth with a bump.
