As I’m sure you have heard by now, SpaceX (Space Exploration Technologies Corp.) is planning a record breaking initial public offering with shares to start trading on 6/12. The Mega IPO is expected to set the stage for OpenAI and Anthropic PBC to IPO later this year.

While Musk will retain control of the company through 93.6% ownership of Class B shares, the IPO gives investors the opportunity to own a slice of the rocket maker. Upon launch, it will immediately become one of the most valuable companies in the world.

Outside of the sheer volume of the IPO, the transaction is making the news for other unconventional attributes. Could the SpaceX IPO reshape how companies approach public offerings in the future?

• Sky High Valuation: With a hefty pipeline and buzz around AI, it is clear the IPO is being valued on future earnings and revenue. While there are many opinions around whether the $1.75 trillion valuation is justifiable, the projected price to sale ratio (PSR) will be more than 90 to 1, one of the highest in US market history. For comparison purposes, as Mark Hulbert from MarketWatch points out, the aggregate S&P 500 PSR is 3.7 with Nvidia at 20.7. Jay Ritter, Professor of Finance at University of Florida, has demonstrated that IPO PSRs that were above 40 lagged the market by 58.5% over the three years after coming to market. The three core, distinct business units (Space Division, Starlink and SpaceXAi) further complicates valuation calculations.
• Allowed to enter select indices early: Index providers typically require a seasoning period before newly public companies can enter an index, partly to protect the trillions of dollars in passive assets linked to those indexes from the heightened volatility that often follows an IPO. Nasdaq and FTSE Russell recently updated their rules to accommodate SpaceX, allowing much quicker inclusion. In a world where companies are staying private for longer, will the new flexibility around index inclusion cause more volatility around the passive retail investor going forward?
• Fixed Issuance price: In a typical IPO, the company adjusts the IPO price based on investor feedback during the roadshows. For a myriad of reasons, SpaceX has announced that it is coming to the market at a fixed price, $135.
• Retail investor target: To capitalize on the strong loyalty Elon Musk’s followers have demonstrated, retail investors will have more opportunity to participate in the IPO. While institutional investors typically receive preferential IPO treatment, SpaceX has reportedly reserved as much as 30% of shares for the retail space. This percentage far surpasses the usual average of 5-10%. In addition, a major brokerage account (Fidelity) recently lowered the minimum account size threshold to $2,000.

Many investors will be watching SpaceX’s stock price closely over the next few weeks, particularly to see if these unorthodox choices have any impact on the stock and demand trajectory. Elon Musk has already had a sizable impact on electric cars, AI and rocket launching. Will his most recent IPO have influence on the way IPOs are structured and received going forward?