SpaceX is aiming to raise $75 billion in what could be the largest IPO in history, according to data from Renaissance Capital. The SpaceX proposal is Elon Musk’s first in 16 years since Tesla went public in June 2010. In 2019, Saudi Aramco raised $25.6 billion in an IPO on the Saudi exchange. This amount made the oil giant the world’s most valuable company. Now, seven years later, the rocket and AI company has raised nearly three times that amount and is set to break that record. SpaceX is seeking a $1.8 trillion valuation, and that number will be put to the test when it goes public on Friday. At that valuation, the company would instantly rank among some of the most valuable publicly traded companies, including Alphabet, Apple, Amazon, Microsoft, Nvidia and Musk’s other company, Tesla. Saudi Aramco was valued at $1.7 trillion when it filed for IPO. The state-owned oil giant’s market capitalization is now $6.5 trillion. But unlike Aramco, some of today’s most valuable companies entered the public markets at relatively low valuations. Nvidia, the world’s most valuable company, started with a valuation of $625 million, compared to SpaceX’s estimated valuation of $1.8 trillion, about 2,900 times more. Apple, which went public in December 1980 at a modest valuation of $1.8 billion, is now one of the most valuable companies with a market capitalization of $4.3 trillion. Amazon went public in 1997 at a valuation of $438 million. Adjusted for inflation, this currently equates to less than $1 billion, or a fraction of SpaceX’s proposed valuation. Tesla debuted in 2010 at a valuation of about $1.7 billion, but SpaceX could enter the public market at more than 1,000 times that valuation. High valuations can limit future growth Jay Ritter, a finance professor at the University of Florida who has studied IPOs extensively, compares SpaceX’s starting valuation to Nvidia’s to illustrate how much future success is already reflected in the price. When Nvidia went public in January 1999, its market capitalization after the first trading day was about $600 million, giving the chipmaker plenty of room to grow. Nvidia currently has a market capitalization of $4.8 trillion, making it the world’s most valuable company. In contrast, SpaceX already starts at a very high valuation, so its upside potential is much more limited, Ritter said. Companies going public at unusually high valuations may become more common as highly valued AI companies like Anthropic and OpenAI approach public markets with valuations of $965 billion and $852 billion, respectively. “These are great companies,” Ritter said. “They have great potential for significant revenue growth and high profitability, but with such high valuations, a lot of things have to go right.” The recent IPO rush highlights how companies get bigger and more mature before pursuing an IPO. All seven Mag companies had an IPO in their first seven years. SpaceX, by contrast, has remained private for 24 years. Historical IPO returns suggest that investors should look for clues, especially the price they are paying or about to pay at the time of their investment. Ritter’s research on IPO companies highlights that companies that enter the market with unusually high price-to-sales ratios struggle, on average, to live up to the optimistic expectations built into their valuations. “But I remain optimistic that the tech industry is spending a lot of money now and has the potential for big returns down the road,” Ritter said. “That’s why venture capitalists are willing to pay such a high price and give it such a high valuation.”
