The SpaceX IPO is on Friday with the company raising $75 billion in the IPO which would value the company at US$1.75 trillion. It’s both the largest capital raise and the largest company to ever IPO, even though just 4.2% of the company will be floated.
The company will be fast-tracked into indexes and that should add some bids after 10 trading days (and in the lead up) when it’s to be included. All that adds up to a successful IPO at $135/share and if reports can be believed, it’s four times oversubscribed.
Gun to my head: I’m buying it despite it’s wild overvaluation.
The problem is down the road when more and more shares hit the market. The launch is said to make 4000 employees millionaires, including a report that one of them is a cafeteria worker.
Employees are going to want to sell shares, or at least some of them. They can’t right away but after the quarter ending in June — its first results as a public company — insiders can sell up to 20% of their eligible locked-up shares. If shares have risen at least 30% above the IPO price, they can sell another 10% of their holdings.
The results are due around July 28-August 14 so that will be the critical window.
It doesn’t get any easier from there as there are lockup expiry tranches at days 70/90/105/120/135. Another 28% is available after Q3 earnings and everything free at day 180. Musk himself holds 42% of the company but can’t sell for 1 year along with other significant shareholders that are said to hold about 60% of the value of the company.
All told, there is a slow-motion climb in the public float and how quickly it’s liquidated will likely depend on how the share price is doing and how the company performs.
