Musk is brewing the "craziest IPO in history"! When SpaceX lands on the market, will the U.S. stock market move from the "Mag7" era to the "Great Eight Heroes" era?

Whether it's Wall Street large institutional investors or individual investors, news reports about the potential IPO of the space exploration super unicorn SpaceX, with a valuation as high as $800 billion, are overwhelmingly welcomed. If the largest IPO in history comes true, it will also help SpaceX founder Elon Musk raise funds for his ambitious goal of landing on Mars, potentially pushing the overall valuation of this rocket and satellite space exploration company to over $1 trillion, as some large institutional investors have been waiting for years to buy shares of the company. According to insiders, SpaceX plans to raise over $30 billion through an IPO that could take place as early as June next year. Shay Boloor, Chief Market Strategist at Futurum Equities Research, said in a media interview that despite SpaceX focusing on a high-risk and capital-intensive business, demand for its stock from individual investors will be "very significant." Undoubtedly, SpaceX's well-established and strong rocket launch and Starlink business will greatly enhance its IPO maturity; however, historical data shows that high valuation companies often face market sell-offs and poor stock performance in the mid to long term after an IPO. "This will be the craziest IPO project in the history of the global stock market. If its target valuation is $1.5 trillion, I will not be surprised at all if it quickly rises to over $2 trillion once it starts trading," Boloor said. Insiders said that SpaceX, under the leadership of Musk, is partnering with a Wall Street large investment bank to advance its IPO plans, with the planned fundraising size far exceeding $30 billion and potentially becoming the largest IPO in history. On December 9th, according to media reports, SpaceX under Musk's leadership plans to go public as early as the mid to late 2026, with fundraising well over $30 billion. According to insiders, the company's target valuation is about $1.5 trillion. If SpaceX sells 5% of its shares as planned, fundraising will reach about $40 billion, well surpassing the world's largest IPO record set by Saudi Aramco at that time. Saudi Aramco raised $29 billion in 2019, becoming the largest IPO to date. It's worth noting that Saudi Aramco only sold about 1.5% of its shares at the time, far below the float ratio of most listed companies. It is expected that SpaceX will use some of the IPO funds to develop a large AI data center in space, including purchasing significant chip hardware needed to operate. However, reports indicate that the timing of the listing may be adjusted due to market conditions and other factors, possibly delayed until 2027. Insiders revealed that SpaceX is expecting revenue of about $15 billion in 2025, increasing to $22-24 billion in 2026, with most of the revenue coming from the Starlink business. The company is speeding up its IPO partly due to the strong growth momentum of the Starlink satellite internet service, including the prospects for direct mobile business, as well as the development progress of the Starship rocket for moon and Mars missions. However, by reviewing the global stock market's large IPO cases over the past forty years, we can find that high valuation new tech companies rarely bring sustainable long-term investment returns. Risk and Drama Investors and analysts generally believe that Musk's unconventional management style and anti-establishment rhetoric as CEO and founder of SpaceX do not pose a significant valuation obstacle. Among the five companies Musk currently leads, including infrastructure company The Boring Company and xAI, the AI startup company and owner of the X social platform (formerly Twitter), his management style at Tesla, Inc., which is the only publicly traded company among them, has been characterized by civil penalties and conflicts with regulatory agencies. After US Securities and Exchange Commission officials stripped him of his chairman role and limited his social media use due to a tweet in 2018 claiming that he had secured funding to take Tesla private, he called these government officials bastards. Musk is currently the richest person in the world, with a net worth of over $460 billion. Earlier this year, he threatened to leave Tesla, Inc. if the board did not approve an unprecedented and ten-year-long $1 trillion super compensation plan, which ultimately landed successfully, as expected by the market. After Musk took over the Department of Government Efficiency under the Trump administration for four months, Tesla, Inc.'s stock price and sales both suffered severe blows due to Trump's angering of American establishment elites and some extreme MAGA forces. Christopher Marangi, Co-Chief Investment Officer of GAMCO Investors under Mario Gabelli, said that innovative CEOs like Musk undoubtedly bring risks and drama to a company, but "these are also an integral part of investing in such companies, as dramatic returns often compensate for the risks faced by holders." GAMCO has exposure to SpaceX through an investment in EchoStar, which included SpaceX shares as part of a spectrum trade in September. Marangi said it's "too speculative" to speculate whether GAMCO will increase its stake in SpaceX's IPO, but "conceptually, we are very excited about the prospects of space-oriented technology companies." He noted that GAMCO also holds shares in Telesat. "Meaty and Sparkling" Dan Hanson, Senior Portfolio Manager of the $2.1 billion Quality Equity Fund under Neuberger Berman, said SpaceX's current strong operating conditions combined with its future potential should attract significant investor interest in its unprecedented stock market IPO. As of the end of November, about 5% of the fund's assets were in SpaceX's unlisted shares. "It's a rare situation where you both get the real 'steak itself' and the sizzling and appealing 'sizzle'," he said in an interview. Hanson said that while projects like sending humans to Mars may attract interest from mainstream investors, SpaceX's launch business and Starlink communication products are already quite mature, which will help it achieve a more solid valuation than other space tech companies - and also means it is ready for an IPO. Hanson said that the funds raised through the IPO could help SpaceX provide vital financial support for new technologies, such as the large space AI data center that Musk envisions, which do not require cooling or consume large amounts of electricity like ground data centers. James St Aubin, Chief Investment Officer of Ocean Park Asset Management, who does not hold SpaceX shares, said, "In today's tech revolution, it has all the signs of becoming the darling of the market. Its space exploration and commercial space services have a 'blue-sky outlook.' This allows some aggressive investors to overlook any concerns about valuation and let their predictions of growth prospects run wild." St Aubin said that by 2026, investors may discuss the so-called "Great Eight," in addition to the "Magnificent Seven" tech giants, including NVIDIA Corporation, Alphabet Inc. Class C, among others, which are part of the heavyweights of the US stock market, while adding SpaceX in the mix. The so-called "Magnificent Seven," which account for high weightings in the S&P 500 index and the Nasdaq 100 index (around 35%), including Apple Inc., Microsoft Corporation, Alphabet Inc. Class C, Tesla, Inc., NVIDIA Corporation, Amazon.com, Inc., and Facebook parent company Meta Platforms, have been the driving force behind the record highs in the S&P 500 index and are seen by top Wall Street institutions as the most capable of bringing substantial returns to investors in the largest technological revolution since the internet age. With the launch and global popularity of the revolutionary OpenAI ChatGPT central to global economic growth over the past three years, there is a trade involving the complete dominance of the US stock market by a more broadly defined investment portfolio: buying into the "Magnificent Seven." However, as artificial intelligence becomes increasingly constrained by massive infrastructure and energy supply bottlenecks, the next major leap in AI may not happen on land, but in space - this is the grand vision recently proposed by Elon Musk on X. "On a low-latency, sun-synchronous orbit, AI computing satellites that only transmit the computation results back will become the most cost-effective way to generate AI bit streams within three years. Moreover, because readily available power resources on Earth are scarce, expansion at a pace of four years is also far ahead. Launching one million ton-class satellites each year, each satellite equipped with 100 kilowatts of power, would add over 100 gigawatts of AI computing capacity annually, without any operating or maintenance costs, and connected to the Starlink constellation via high-bandwidth lasers." "Further, satellite factories could be built on the moon, and mass drivers (electromagnetic railgun) could accelerate AI satellites to lunar escape velocity without rockets. This will bring AI computing capacity to over 100 terawatts annually, taking a significant step toward human civilization Kardashev II," Musk wrote in a post on X. The Curse of High Valuations - High-Value IPOs Often Underperform More Broadly Looking back on major IPOs over the past 40 years, we can see that high valuation new tech companies rarely bring long-term investment returns. According to the statistics of Jay Ritter, a retired professor at the University of Florida who specializes in studying IPOs, between 1980 and 2023, there were 45 companies whose inflation-adjusted revenue on the first day of trading was at least $100 million and had a valuation of at least 40 times their annual sales, but three years later, only seven of them were still trading at a higher price. On average, these stocks lost about half of their market value from their first day closing price, performing about 63% below broader stock market benchmark indices. Typical underperformers include companies like Beyond Meat, which debuted in 2019, Palm's IPO in 2000, and Snowflake's high-profile IPO in the U.S. stock market in 2020; these companies saw their stock prices fall well below the IPO price after the first year of trading. Datadog and Zoom, which went public in 2019, are among the few companies that have shown enduring strong stock performance. Tesla, Inc., which went public with a more moderate valuation in 2010, is an outlier, with its stock price having exceeded the IPO price by far in the past decade. "The very high valuation SpaceX can achieve today does indeed diminish some of the upside," Ritter said. "Even if it grows into a super giant tech company worth around $2 trillion, that represents only 100% to 200% returns for investors."