SpaceX blasts off with record $75B IPO. This is what advisors need to know

Elon Musk’s SpaceX has made its hugely anticipated debut on the public markets in the biggest IPO of all time. But advisors may want to take a step back from all the buzz and fanfare surrounding the mega-IPO and look at the long-term picture.

The company priced its shares at $135 Thursday, raising $75 billion on the sale of 555.56 million shares for the largest-ever IPO. SpaceX’s offering easily dwarfs Saudi Aramco’s $25.6 billion IPO in 2019, which previously held the title of largest public offering.

Trading on the Nasdaq under the ticker symbol SPCX, SpaceX shares opened at $150 and ended the session at $160.95, giving the company a valuation of more than $2 trillion. 

While intense attention has been lavished on SpaceX for months (and, arguably, years) in the build-up to the company’s IPO, John Belton, portfolio manager at Gabelli Funds, urges advisors to take a long-term view of the equity. “SpaceX is the ultimate growth stock. I think this is a company with significant growth potential ahead of it,” he said, in a statement. “It's definitely going to be a long-term story, and I think it will take time for the stock to find its footing in the public markets. But there are a lot of exciting opportunities ahead."

Certainly, Musk’s company has revolutionized the space industry with its use of reusable rockets and its ever-growing constellation of Starlink satellites. Set against this backdrop, the company has also established itself as a cornerstone of the U.S. government’s ambitious space exploration agenda.

It should be no, surprise, then, that SpaceX’s IPO that the offering has even sparked talk of “single-stock FOMO.”

Jay Woods, chief strategist at Freedom Capital Markets, thinks there will be better opportunities to enter SpaceX down the road. “Personally, I would wait a few weeks—or even a few months—and ideally at least one earnings cycle before considering a larger position,” he said, in a statement.

For investors experiencing FOMO, a reasonable approach may be to buy a small portion of the position they ultimately want, perhaps 10% of their intended allocation,” according to Woods. “If the stock continues higher, they'll participate. If it pulls back, which I think is the more likely scenario, they'll have preserved most of their capital and should have a better opportunity to build out the position at more attractive levels.”

As for the pathway ahead of SpaceX, the company’s S-1 filing with the SEC identified “the largest actionable total addressable market (TAM) in human history” – a mind-boggling $28.5 trillion. This number consists of consisting of $370 billion in pace from space-enabled solutions, $1.6 trillion in connectivity across $870 billion in Starlink Broadband and $740 billion in Starlink Mobile as well as additional opportunities in enterprise and government, the company said. SpaceX also identified $26.5 trillion in AI across $2.4 trillion in AI infrastructure, $760 billion in consumer subscriptions, $600 billion in digital advertising, and $22.7 trillion in enterprise applications.

Nancy Tengler, CEO and chief investment officer Laffer Tengler Investments, says that, when considering what SpaceX will look like five or 10 years from now, it’s important to take some of the projections with a pinch of salt. “Elon has talked about a total addressable market of $28.5 trillion,” she said. “Interestingly, the majority of that opportunity is tied to what is currently the company's cash incinerator—the AI segment of the business.”

“We're also expecting a merger with Tesla in 2027 or 2028, so it's possible to envision a scenario in which not only the company's market capitalization, but also its revenue growth, becomes exponential,” Tengler added.