SpaceX IPO closes up 19% as market cap nears $2.3 trillion

On Friday, SpaceX officially debuted on the Nasdaq stock exchange. The company’s shares began trading at $150, which represented an increase of around 11% over the official IPO price of $135 set during pricing on Thursday. Investor demand pushed the stock even higher during the session, with the share price reaching a midday peak of $176. By the close of the trading day, the stock settled at $160.95, representing a 19% increase from the initial offering price. This first-day performance pushed the company’s market capitalization to nearly $2.3 trillion, a valuation that officially establishes founder Elon Musk as the world’s first trillionaire.

The stock’s upward movement was driven by high demand coupled with a limited supply of shares. According to Bloomberg, the IPO was oversubscribed by 4x, meaning that many institutional investors did not receive allocations during the initial pricing. Consequently, these institutional buyers are likely purchasing shares on the open market to build their positions. This demand was also a function of the company’s small float—the portion of shares available for public trading—which stands at only about 4% of total shares, while early investors and employees hold the rest. The retail trading platform Robinhood reported that it experienced “record-breaking” traffic on Friday in the hours following the debut.

The public listing represents one of the largest windfalls in the history of venture capital, delivering massive returns for the early backers of the aerospace company:

• Founders Fund: The firm previously invested $600 million to acquire a 3% stake in the company. Its returns are now estimated at more than $50 billion based on the IPO price of $135, according to Bloomberg.
• Sequoia: The venture capital firm holds a stake in the newly public company valued at over $20 billion.
• Andreessen Horowitz: The venture capital firm holds a stake now worth more than $10 billion.

In addition to institutional investors, the liquidity event also impacts the personal wealth of the company’s workforce. According to reporting from The New York Times, approximately 4,400 current and former SpaceX employees will become millionaires as a result of the public debut. Furthermore, around 400 employees will become centimillionaires, which is defined as individuals with a net worth over $100 million.

Why it matters

SpaceX’s public market debut resulted in a significant stock price increase and established the company’s founder as the world’s first trillionaire, while generating massive returns for early venture capital investors.