The SpaceX IPO is on Friday with the company raising $75 billion in the IPO which would value the company at US$1.75 trillion. It’s both the largest capital raise and the largest company to ever IPO, even though just 4.2% of the company will be floated.
The company will be fast-tracked into indexes and that should add some bids after 10 trading days (and in the lead up) when it’s to be included. All that adds up to a successful IPO at $135/share and if reports can be believed, it’s four times oversubscribed.
Gun to my head: I’m buying it despite it’s wild overvaluation.
The problem is down the road when more and more shares hit the market. The launch is said to make 4000 employees millionaires, including a report that one of them is a cafeteria worker.
Employees are going to want to sell shares, or at least some of them. They can’t right away but after the quarter ending in June — its first results as a public company — insiders can sell up to 20% of their eligible locked-up shares. If shares have risen at least 30% above the IPO price, they can sell another 10% of their holdings.
The results are due around July 28-August 14 so that will be the critical window.
It doesn’t get any easier from there as there are lockup expiry tranches at days 70/90/105/120/135. Another 28% is available after Q3 earnings and everything free at day 180. Musk himself holds 42% of the company but can’t sell for 1 year along with other significant shareholders that are said to hold about 60% of the value of the company.
All told, there is a slow-motion climb in the public float and how quickly it’s liquidated will likely depend on how the share price is doing and how the company performs.
This article was written by Adam Button at investinglive.com.
