When SpaceX pulled back the curtain on its finances last week, some investors were taken aback.
The company’s space business was not generating as much revenue or profit as they had expected, and the losses from xAI, its artificial intelligence unit, were surprisingly large.
But some of those doubters will buy SpaceX’s stock anyway when the company goes public as soon as next month.
That’s because many investors said they could not pass on a company with Elon Musk as the main attraction. Nor could they forgo an initial public offering shaping up to be a marquee event for Wall Street.
“More people are biased to participate than not because no one wants to miss it,” said Renos Savvides, head of equity capital markets at the mutual fund manager Neuberger.
“If you miss SpaceX and it works, that’s when you can get tapped on the shoulder by your boss and say, ‘We need to have a bit of a talk’,” he added. If SpaceX’s offering flops, a huge swath of investors will be hit and no one will stand out, he said.
As Mr. Musk and his investment bankers prepare SpaceX for one of the largest I.P.O.s ever, they are working to create a self-fulfilling prophesy in which investors feel the risks of passing on the stock outweigh those of buying into it.
If this happens, Mr. Musk’s giant I.P.O. — which could raise more than $50 billion and value SpaceX at more than $1.25 trillion — would likely succeed regardless of questions about the underlying business. SpaceX lost $4.3 billion in the first three months of this year alone.
A blockbuster SpaceX offering would pave the way for other mega stock offerings expected later this year from OpenAI and Anthropic, the A.I. start-ups positioning themselves as generational tech companies.
SpaceX is a rare I.P.O. that could meet the company’s lofty fund-raising goals not because of its financial prospects but based largely on vibes, investors said.
“There’s a lot of enthusiasm for the deal, in part because people believe that there is enthusiasm,” said Craig Coben, a former global head of equity capital markets at Bank of America.
“So many people need this to go well,” he added, including the bankers collecting fees from the I.P.O. and early investors looking to cash out their shares. “It’s a steamroller,” he said of the deal.
Mr. Musk, 54, has long enjoyed a singular status on Wall Street as a Pied Piper figure who can summon everyday people to put money into his companies.
Nearly 16 years ago, these so-called retail investors piled into the I.P.O. of Mr. Musk’s electric vehicle company, Tesla, which proved lucrative for those who held on. Someone who bought $1,000 of Tesla shares at the company’s I.P.O. in 2010 would have seen their value soar to around $400,000 today.
SpaceX, which was founded in 2002, has followed a similar trajectory. The rocket maker was worth $1 billion in 2010; $25 billion in 2018; $125 billion in 2022; and $350 billion in late 2024. In February, SpaceX bought xAI and valued itself at $1.25 trillion.
Mr. Musk’s bankers are again counting on retail investors — who are expected to make up about 30 percent of SpaceX’s buyers, far more than a typical offering, according to TK people familiar with the matter — to help work up enthusiasm for the company’s I.P.O.
SpaceX has appealed to Mr. Musk’s ardent believers with grand ambitions. In the company’s prospectus, it said it had “identified the largest actionable total addressable market (‘TAM’) in human history” totaling $28.5 trillion, equivalent to roughly 90 percent of current U.S. economic output.
Bankers are doing their part to make sure retail investors come through for Mr. Musk again. Bank of America, one of the banks helping to take the company public, has led efforts to tap retail investors, including its wealthy clients. The company recently welcomed some of those prospective investors on field trips to SpaceX’s sprawling campus in Hawthorne, Calif., to see the technology used to design and assemble rockets, according to two people familiar with the tours. While Mr. Musk has arranged such tours before for friends, family and celebrities, they are far from typical for I.P.O.s.
SpaceX has also hosted investors at its Starbase facility near Boca Chica, Texas, and its A.I. hub in Memphis, where it built two giant data centers, according to three people familiar with the matter. At the meetings, top executives, including Mr. Musk and Gwynne Shotwell, SpaceX’s president and chief operating officer, explained the company’s operations and long-term goals.
“The retail bid for SpaceX will be very, very significant,” Mr. Savvides of Neuberger said, noting that investors all over the world are following the deal.
Charles Schwab, Fidelity, Robinhood and SoFi are focusing on marketing the deal to retail investors through their online brokerage platforms. UBS and Deutsche Bank have been asked by SpaceX to tap their networks for individual investors in Europe, the people said.
SpaceX’s share price may also be helped after it starts trading. In March, Nasdaq announced that it would require large I.P.O.s like SpaceX’s to be included in its Nasdaq 100, an index that tracks the largest nonfinancial companies on the exchange, after just 15 days of trading.
Previously, the process of adding a company to the Nasdaq 100 took at least three months after a public offering to allow for the company’s valuation to settle.
The rule change effectively forces investment funds that are designed to mirror the companies in the Nasdaq 100 to buy SpaceX shares shortly after they are listed. The company then gains access to an important source of stock buyers much earlier than it would traditionally have. Some investors may also look to buy SpaceX’s shares before the forced buying drives up their price.
Other factors could fuel buying during the first days of trading.
Some large investors who own private stakes of SpaceX may be incentivized to buy into the I.P.O. to support the valuations of their private holdings, Mr. Coben said.
SpaceX’s bankers are being careful not to push the company’s valuation too high in the I.P.O., which could scare away some buyers. Earlier this year, bankers at Goldman Sachs, the lead firm taking the company public, told SpaceX executives that the rocket maker could be valued instantly in excess of $2 trillion once it started trading, according to a person who saw the bank’s pitch documents. (Banks typically write these documents before seeing a company’s financials.)
But by late April, expectations had changed. When Goldman bankers hosted a cocktail party that month at Beefbar, a Manhattan steakhouse, with major investment firms including BlackRock and the hedge fund Citadel, the consensus among attendees was that SpaceX’s I.P.O. was much more likely to be valued closer to $1.5 trillion than $2 trillion, according to two attendees. A Goldman Sachs spokesperson declined to comment.
Some investors think even that is too lofty.
“Given all the hype,” Gary Black, a managing partner at The Future Fund, which manages hundreds of millions in exchange traded funds, or E.T.F.s, wrote on social media that SpaceX was “likely to be way overpriced”
“Will be more interested after it falls by 50%,’’ Mr. Black added.
Ryan Mac and Joe Rennison contributed reporting.
Maureen Farrell writes about Wall Street for The Times, focusing on private equity, hedge funds and billionaires and how they influence the world of investing.
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