Next week the SpaceX IPO hits the tape, and I think it is the most significant capital markets event we have had. The market is treating it as a referendum on the AI industrial revolution itself. Here are the facts. The company is raising $75 billion on a new issuance priced at $134 a share. The offering is 555,555,555 shares, which I take to be Elon Musk being slightly esoteric. That raise represents about 4% of the company, which puts the implied valuation at $1.7 trillion. That is a big deal by any measure.
The index effects are smaller than people expect in one place and larger in another. The S&P 500 will not include SpaceX for a year. There is no dilution effect from the deal and long-term index investors do not need to do anything about it. The Nasdaq is where this lands, and specifically the Nasdaq 100. That is where the weighting question gets serious, and it is the part of this deal worth spending real time on.
The reason the first week matters is structural. High-frequency traders routinely control 90% of the volume in the equity market, and that has been true for at least a decade. In the derivative space the share is larger still. Introduce a new $1.7 trillion name into that machinery and volatility rises, volumes rise, and turnover goes up exponentially. Wall Street is going to make a fortune on the trading alone. None of that tells you what the company is actually worth.
So I would not form a hard opinion on valuation in the first weeks. Until the market settles on a price the majority of investors accept, this is a speculative bet, and the quants know a lot more than the rest of us about where the exposures and the risks sit. Sit back and watch.
My own view, and it is a view rather than a forecast I would stake anything on, is that this ends up far larger. I think SpaceX is a $10 trillion company at some point, maybe three years out, maybe five, maybe seven. I think the S&P 500 reaches 10,000 more easily than it ever returns to 5,000. On that horizon the entry price matters less than whether the thesis holds. I could be wrong, and the honest position is that nobody has an earnings history to check me against yet. For disclosure, Perry Capital’s next quarterly report to clients will show a position in SpaceX, and we hold a large position in the Nasdaq 100.
