SpaceX’s IPO as Unconventional as Musk Himself

A New Approach to an Unprecedented IPO

Elon Musk is preparing for a stock-market debut that promises to be unlike any other. SpaceX, the rocket-and-satellite company he founded, is set to make its initial public offering (IPO), and it’s expected to be the largest in history. The timing of the event has been carefully chosen—mid-June, just before Musk’s birthday. However, what sets this IPO apart is not just its size but also the unconventional approach Musk is taking.

Instead of following the traditional model where executives travel to meet investors, Musk has proposed that investors come to SpaceX. This includes visits to manufacturing facilities and potentially witnessing rocket launches. According to people familiar with the matter, the goal is to create an immersive experience that could leave investors eager to invest heavily in the IPO.

The deal is expected to raise between $40 billion and $80 billion, making it one of the most significant IPOs ever. The company is currently in the process of filing confidentially with regulators, with a public filing expected in the coming weeks. The timeline can vary depending on how many questions regulators have during the review process.

Flouting Norms and Rethinking Traditions

SpaceX is considering several unique strategies as part of its IPO plan. One of these is the idea of unusual lockup periods, which would limit the ability of early investors to sell their shares immediately after the IPO. Another is providing preferential treatment to investors who have backed Musk’s other ventures, such as Tesla and Twitter.

Additionally, the company is looking into allocating a larger portion of shares to individual investors than is typical in IPOs. In most cases, retail investors receive around 10% of the shares offered, but Musk has expressed a desire to give them up to a third or more.

The company is also considering hosting events at its locations, including its sprawling complex near the Los Angeles airport and its rocket launch site in Florida’s Cape Canaveral area. While it’s unclear whether SpaceX executives will still visit investors directly, the focus remains on creating a unique and engaging experience.

Ideas from Musk and His Team

Many of these ideas are being driven by Musk himself, along with his team members, including bankers like Morgan Stanley’s Michael Grimes. However, it remains uncertain which of these plans will ultimately be implemented.

Musk is known for his unconventional style. He has been known to sleep at the offices of his companies and engage in “rage firings.” He has also waived due diligence before signing deals, such as his acquisition of Twitter. Corporate announcements are often made on X, the social media platform formerly known as Twitter, sometimes leading to regulatory scrutiny.

Rewarding Loyalty

In Musk’s world, loyalty is rewarded. This principle extends to the SpaceX IPO, where preferential treatment is being considered for those who have invested in Musk’s other companies. This includes Tesla shareholders and investors who supported his 2022 effort to take over Twitter.

Musk has previously mentioned this idea. At a Tesla shareholder meeting in November, he expressed a desire to allow Tesla shareholders to invest in SpaceX. This move is seen as a way to reward the retail investors who have helped power Tesla’s success and who are often fans of Musk.

A Focus on Individual Investors

SpaceX is aiming to give a larger share of its IPO to individual investors than is common. In typical IPOs, retail investors receive only around 10% of the shares offered. However, Musk has indicated that he wants to allocate a much larger portion, possibly up to a third or more.

This strategy is similar to what happened during the Tesla shareholder vote on a pay package of up to $1 trillion for Musk. While institutional investors were the biggest opponents, Musk highlighted support from individual investors, noting that roughly 90% of retail shareholders had voted in favor.

A Blockbuster Rollout

The scale of SpaceX’s IPO is already having an impact on the financial industry. Bankers involved in the deal are dealing with the challenges of determining the exact amount to raise and the valuation of the company. These decisions will be made closer to the time when the roadshow pitch to investors begins.

If SpaceX raises anywhere between $40 billion and $80 billion, it would surpass the nearly $30 billion raised by Aramco in its 2019 IPO. The company is also considering longer lockup periods for some early shareholders, which could help stabilize the stock price after the IPO.

Another unique aspect of the IPO is SpaceX’s goal of securing an early spot in large stock indexes such as the Nasdaq-100. This move could attract a flood of new buyers to its shares.