SpaceX's mega‑IPO is seen as not signalling an IPO‑market recovery

SpaceX's US$75 billion IPO is seen as posing a risk of draining liquidity from the US IPO market.

NEW YORK - SpaceX's record-breaking initial public offering (IPO) is being viewed as Wall Street's biggest spectacle since the pandemic-era listing boom.

As reported by Reuters on Thursday (21/05), the IPO is expected to attract strong retail investor interest through a combination of Mars exploration ambitions, artificial intelligence (AI) infrastructure, and space-based data centre projects.

However, several analysts believe the SpaceX IPO should not be seen as a benchmark for a broader recovery in the IPO market because the company's business profile differs significantly from that of typical IPO candidates.

"SpaceX is simply too large and has such an extraordinary valuation that it is not suitable as a normal benchmark for the IPO market," said IPOX analyst Lukas Muehlbauer.

According to Reuters, citing Dealogic data, the SpaceX IPO is expected to raise more than IDR 1,215 trillion, with a valuation of around IDR 28,350 trillion, making it one of the largest stock market listings in US capital markets history.

Analysts believe the scale of the transaction could absorb liquidity and investor attention away from other companies also planning to go public.

A European capital markets banker said many institutional investors are expected to prioritise SpaceX because of the deal's size and the pressure on fund managers to participate.

According to Muehlbauer, some companies have even accelerated their IPO plans in order to enter the market before SpaceX captures investor focus next month.

This trend can already be seen in several IPOs that have entered the market in recent weeks, including AI chip company Cerebras and investment bank Lincoln International.

Among retail investors, the SpaceX IPO is increasingly being viewed as a FOMO (fear of missing out) trade, supported by Elon Musk's popularity and the perceived scarcity of the company's shares.

Unlike traditional IPOs, which usually rely on cash flow fundamentals and stable growth projections, SpaceX is being marketed more through narratives around its futuristic vision and industry dominance.

The company's IPO filing shows that most of SpaceX's revenue last year came from its Starlink satellite internet business, with total revenue reaching IDR 302.45 trillion, while the company's AI unit was still loss-making.

Reuters previously reported that Elon Musk is also considering allocating up to 30% of the IPO shares to retail investors, far above the average allocation in traditional IPOs.

Cerity Partners partner Michael Ashley Schulman said retail investor enthusiasm for SpaceX is being driven by the strength of the market narrative.

"SpaceX could become the biggest narrative event of a generation," he said.

Although the SpaceX IPO is expected to be highly successful, analysts believe this alone will not be enough to revive the sluggish US IPO market following the 2021 listing boom.

They argue that a broader IPO market recovery will still depend on geopolitical stability, stock market conditions, and easing investor concerns over AI disruption in legacy technology sectors.

Annex Wealth Management Chief Economic Strategist Brian Jacobsen stressed that the SpaceX IPO is not representative of overall market conditions.

"This is not a signal for the IPO market in general," he said.

Georgetown University finance professor Reena Aggarwal added that SpaceX's unique business model does not guarantee other companies will achieve similar IPO results.

"However, if this IPO fails for any reason, the impact could weigh on the IPO market as a whole," she said. (SF/LM)