Space Exploration Technologies (SpaceX) is scheduled to make its stock market debut on New York’s NASDAQ on Friday next week. She changed her rules specifically for this. SpaceX is targeting an issue price of $135 per share. This means the company values itself at $1.75 trillion.
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This is reported by Reuters, citing an unnamed person in the know. However, only a small portion of the shares will be traded: initially 555 million shares, corresponding to almost 4.3 percent of the space-satellite-AI-social media conglomerate. Ultimately, Elon Musk’s control should be cemented. This means that the IPO is expected to bring in “only” $75 billion of the $1.75 trillion theoretical valuation, minus a few billion in expenses. That would be the largest IPO of all time in dollar terms.
Of course, SpaceX could raise the price at the last minute to reach the targeted $80 billion. This would require $144.
Additional shares on the market soon
Soon, existing investors and employees who have earned SpaceX shares will be able to put some of their shares into the market. Instead of the usual 180-day holding period, SpaceX has set shorter, staggered dates.
It is also unusual that 30 percent of the new shares will be sold to individual investors. SpaceX management expects particular enthusiasm from these, expressed in a total of 22.5 billion US dollars. Professional investors look at the company’s high losses and are not quite as enthusiastic. Typically, not 70 percent, but 90 to 95 percent of all shares in a US IPO go to financial institutions.
Automatic purchases starting July 7th
But they will have to buy SpaceX shares soon enough – automatically because many of their funds track the NASDAQ 100 index and have to buy the securities it contains. Previously, newly listed companies had to wait three months before they could become part of the index. This helps better price discovery and gives the hype surrounding an IPO time to die down.
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But in order to make itself attractive for the high-volume, AI-inspired IPOs SpaceX, OpenAIs and Anthropics and to outdo the competing New York Stock Exchange (NYSE), the NASDAQ has changed its decades-long tried and tested specifications for the NASDAQ 100 index. The deadline is now just three weeks.
In addition, the NASDAQ with its “Lex SpaceX” abolished the index rule that required at least ten percent free float. This means that numerous automated funds, especially exchange traded funds, will issue SpaceX buy orders worth tens of billions of dollars in just five trading days starting July 7th, paired with sell orders for other index securities in the same amount. This model ensures virtually guaranteed demand for SpaceX shares, regardless of actual financial developments or fantasies about the company.
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