IPO Dean on SpaceX fixed-price IPO and valuation (with Romaine Bostick, Katie Greifeld)

Jay Ritter explains that SpaceX's fixed-price IPO at $135, set before the roadshow, is highly unusual and likely left ~$20B on the table, more than double any prior US IPO. He notes the first-day jump is not unusual but the upside from here is limited given the ~$2T valuation; even if SpaceX becomes as valuable as Nvidia, that's only 100% upside. He also discusses the retail allocation being cut to ~20% and that many retail investors received only one share each.

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IPO Dean on SpaceX fixed-price IPO and valuation (with Romaine Bostick, Katie Greifeld)

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Ritter notes that tech companies like Nvidia, Microsoft, Alphabet, and Meta have demonstrated enormous growth and profits in certain niches, suggesting a cautiously positive view on tech broadly, though he is cautious on SpaceX specifically due to valuation.

Asks about the fixed-price approach SpaceX took and whether it left money on the table.

Romaine Bostick
Jay Ritter

The fixed-price setting the offer price before the roadshow is very unusual. The jump today is not unusual. If the stock stays at current levels, the dollar value of the increase will leave about $20 billion on the table, more than twice any other US IPO.

Alibaba left about $9 billion on the table in 2014. SpaceX has blown that away.
Asks about the attempt to allocate more to retail investors and how that affects trading.

Romaine Bostick
Jay Ritter

The main reason for bigger retail allocation is Tesla's large retail shareholder base. The allocation was cut from 30% to about 20%. My friends with Robinhood accounts each received one share.

Maybe a lot of retail investors did get shares, but they didn't get very many.
Asks about valuation given the ~$2T market cap and how much upside remains.

Katie Greifeld
Jay Ritter

That's where I and others have concerns. Nvidia is the world's most valuable company at roughly twice SpaceX's valuation. If SpaceX becomes as valuable as Nvidia, that's only 100% upside potential. When Nvidia went public in 1999, it jumped 60% to a ~$600M market cap, with enormous upside potential. SpaceX's valuation is so high that upside is very limited.
Asks if the same logic applies to Anthropic and OpenAI with their ~$1T valuations.

Katie Greifeld
Jay Ritter

The bullish case is that tech is different in certain niches. Companies like Nvidia, Microsoft, Alphabet, Meta have shown enormous growth and profits without competition eroding margins. SpaceX is really good at rocket launches, and with Starship they'll have low launch costs, enabling low-cost Starlink. The market is willing to give high valuations because of the possibility of enormous revenue growth and high profit margins.

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