Although it is the largest IPO in history, will it also be successful?

● He invested in SpaceX before it launched its first rocket. Now he will make billions
● $2.6 billion mystery: Who repeats Warren Buffett’s mistake?

Is Wall Street ready for an IPO?

SpaceX will trade after the IPO under the symbol SPCX. The issue is accompanied by a long list of underwriters, led by Goldman Sachs, Morgan Stanley, Bank of America, Citigroup and JP Morgan.

It is doubtful whether the American stock market has any idea what event it is walking towards. In an article in the Wall Street Journal, we noted that the initial public offering process has not changed fundamentally since the 1980s, and is carried out through phone calls to potential buyers. The allocation of the shares in the offering is not automatic, but based on the experience of the bankers, who assess which investors will hold the shares for the long term and who will sell quickly. The underwriters scan the order book, a process that, according to the Wall Street Journal, takes many hours. They also point out that Nasdaq will practice with simulated trading openings, in order to make sure that the platform is ready to handle the huge trading volume that is expected in SpaceX shares.

The offering includes an important role of the person who is supposed to take care of the stabilization of the stock, in this case the banker John Paci from Morgan Stanley, who is expected to be on the trading floor, keep up to date with buy and sell orders and decide on this basis when to start trading, on its first trading day. The market estimates that the start of trading will be delayed several hours after the opening of the trading day, according to the Wall Street Journal.

Already today there are thousands of investors who are exposed to the stock through investment vehicles called SPVs (a kind of straw companies that concentrate the investment in a private company) and they can bring pressure on the stock at the beginning of trading, unlike the large pre-IPO investors who usually have a blocking period for the sale of shares. In addition, according to the prospectus, the company will allow the current shareholders to sell their shares on the stock exchange in early stages based on the company’s performance, instead of the usual model of blocking in half year. This should help the stock because not all the shares will be released for trading at once. According to the Wall Street Journal, in an ideal world bankers and CEOs expect a jump of at least 20% in the stock price on the first day, and the pressure on SpaceX is even greater.

“Selling signs”: what does history teach?

SpaceX’s IPO marks the beginning of a new era of initial public offerings at values ​​the likes of which Wall Street has never seen, and it is doubtful that it is prepared for it, not only on a technological level. SpaceX is also expected to be joined later by the private AI giants OpenAI and Anthropic, which are also expected to submit prospectuses for huge IPOs soon.

The Wall Street Journal noted last week that while investor sentiment towards stocks related to AI changes according to market expectations, investors have so far been more patient towards private companies that have posted a record of billions of dollars in losses – this against the background of expectations and faith in the technology they are building. But there are also risks.

Bank of America (as mentioned, one of the underwriters leading the SpaceX IPO) warns that the giant IPOs will lead to the weight of AI shares being close to 50% of the total market value in the US – a concentration that surpasses that of the technology bubble days of the 1990s, and in fact one that has not been seen since the railroad era in the 1880s. The bank’s senior strategist, Michael Hartnett, Indicates a sell signal: the fact that investors are particularly optimistic, the bank’s “Bull & Bear” indicator has reached a level that signals the sale of risk assets.

Bank of America, as well as the investment site Investopedia, mention that huge IPOs do not guarantee huge returns at all. In light of SpaceX’s size, it is expected to be included in the leading indices on Wall Street, such as the S&P 500 and the Nasdaq 100, so funds that follow the indices will have to purchase the stock – and thus any change in it will become a matter that concerns not only Wall Street people but also the average American, and in our case also quite a few Israelis who follow the popular index.

The two entities present an overview of the giant issuances registered so far. Bank of America presented the 10 largest IPOs in history (in the world), and showed that excluding one exceptional IPO (that of the Chinese bank ICBC), the average return one year after a giant IPO is only 8% (see graph).

At Investopedia, they chose a wider range, and examined the five largest IPOs on Wall Street so far. Two produced a return of over 1,000% – Visa with 2,910% since the IPO in 2008 and Facebook (Meta) with 1,498% since 2012. Two more doubled their value: General Motors which was issued in 2010 and has since increased by 134%, and Alibaba by 93% since 2014. The fifth company, Rivian which was issued in 2021, indeed jumped on its first trading day by 29.1% but has since lost most of its value, with a negative return of 82%. Investopedia also notes that so far, 8 companies have raised over $10 billion in their initial public offering on Wall Street, and three of them have already been delisted or sold – ENEL, Deutsche Telecom and AT&T Wireless. “The amount of capital raised is not a good indicator for predicting how an initial public offering will perform,” they emphasize.

Violeta Todorova, a research analyst at Leverage Shares, estimates that the SpaceX IPO is a critical test of the market’s appetite for risk: if investors agree to accept a value approaching $2 trillion, despite the high interest rates and huge losses, it will be a clear sign that the money on Wall Street is still chasing long-term growth stories at almost any price. At the same time, Sylvia Jablonsky, chief investment officer at Defiance, points out that SpaceX reinforces a broader investment trend – the fact that space is gradually becoming another layer of the global economy. However, it points to a widening gap within the economy: the companies benefiting from AI continue to grow rapidly, and other interest-sensitive areas are under pressure.

Between Musk’s salary and settling on Mars

SpaceX’s prospectus shows that the company does benefit from the AI ​​trend, but as mentioned, it is far from profitable. The company operates in three different fields: in the field of space (launches and missions in space), where in 2025 it recorded revenues of approximately 4.1 billion dollars, a growth of 7.6% from 2024; The field of satellite internet through Starlink which yielded revenues of 11.4 billion dollars in the past year – a growth of 49.8%; And the AI ​​field which includes Grok and the X network with revenues of 3.2 billion dollars, a growth of 22.2%. Despite the high growth, the company recorded an operating loss of $2.6 billion in 2025, most of which comes from AI, and a pre-tax loss of $4.1 billion, mainly due to capital investments (CAPEX).

Meanwhile, SpaceX’s prospectus reveals that Musk was satisfied with a salary of only about 54 thousand dollars in 2025. By comparison, the company’s president and chief operating officer, Gavin Shortwell, received $85.8 million in compensation (mostly equity). However, Musk will not be deprived and last January he was allocated blocked shares that will mature according to the performance related to the company’s market value and the establishment of a colony on Mars. At Bloomberg they calculated and found that together with an additional allocation, the value may reach a compensation of 760 billion dollars.

The reward is structured similarly to Tesla’s reward and allows Musk to receive shares in 15 activities depending on meeting performance related to its market value and subject to the fact that it will establish a permanent human settlement on Mars, with at least one million inhabitants. Another condition related to the allocation of shares to Musk in xAI, which was merged with SpaceX last February, is a combination of the company’s value with a milestone of completing the construction of data centers not on Earth, capable of supplying 100 terawatts per year (consumption on the scale of Google, Amazon, Meta and Microsoft combined).