SpaceX IPO Set to Break Historical Fundraising Records
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 days ago
0mins
Should l Buy TSLA?
Source: Fool
- IPO Market Outlook: 2023 is shaping up to be one of the most significant years for IPOs, with AI companies like OpenAI and Anthropic, valued around $1 trillion, planning to go public by year-end, indicating strong growth potential in the tech sector.
- SpaceX IPO Expectations: SpaceX is expected to go public in the second half of June, with a market cap projected between $1.75 trillion and $2 trillion, making it the eighth-largest publicly traded company in the U.S., surpassing Tesla, marking a significant milestone in space infrastructure and AI.
- Retail Investor Opportunities: SpaceX may allocate up to 30% of its shares to retail investors, significantly higher than the typical 5%-10% in IPOs, potentially attracting a large number of everyday investors, but also posing risks of overzealousness.
- Historical Lessons: Despite the optimistic long-term growth prospects for SpaceX, history shows that many high-profile IPOs perform poorly post-launch, suggesting investors should exercise caution and avoid blindly chasing shares on the first day of trading.
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Analyst Views on TSLA
Wall Street analysts forecast TSLA stock price to rise
30 Analyst Rating
12 Buy
11 Hold
7 Sell
Hold
Current: 381.630
Low
25.28
Averages
401.93
High
600.00
Current: 381.630
Low
25.28
Averages
401.93
High
600.00
About TSLA
Tesla, Inc. designs, develops, manufactures, sells and leases high-performance fully electric vehicles and energy generation and storage systems, and offers services related to its products. Its segments include automotive, and energy generation and storage. The automotive segment includes the design, development, manufacturing, sales and leasing of high-performance fully electric vehicles, and sales of automotive regulatory credits. It also includes sales of used vehicles, non-warranty maintenance services and collisions, part sales, paid supercharging, insurance services revenue and retail merchandise sales. The energy generation and storage segment include the design, manufacture, installation, sales and leasing of solar energy generation and energy storage products and related services and sales of solar energy systems incentives. Its consumer vehicles include the Model 3, Y, S, X and Cybertruck. Its lithium-ion battery energy storage products include Powerwall and Megapack.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
SpaceX IPO Valuation May Reach $2 Trillion
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- Market Enthusiasm: A money manager highlighted that clients are extremely excited about SpaceX, particularly due to the impressive revenue from the Starlink project, which controls around 70% of the global satellite market, indicating strong profit potential.
- Risks and Challenges: While many analysts are optimistic about SpaceX's future, they caution that its valuation may be too high, with PitchBook estimating a reasonable valuation between $1.1 trillion and $1.7 trillion, urging investors to proceed with caution.
- Lack of Financial Transparency: SpaceX has yet to disclose its financial statements, creating challenges for investors ahead of the IPO; it is expected to file an investment prospectus in May, which will help assess whether its targeted valuation is justified.
See More
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- Market Reaction: Investors are highly optimistic about SpaceX's IPO, particularly due to its Starlink project controlling around 70% of global satellites, which is expected to generate substantial revenue, although regulatory risks could hinder its market expansion.
- Valuation Challenges: An analysis by PitchBook indicates that SpaceX's fair valuation ranges from $1.1 trillion to $1.7 trillion, significantly lower than its $2 trillion target, presenting investors with considerable risks due to the lack of financial transparency.
- Financial Disclosure: SpaceX is expected to publicly file an investment prospectus in May, at which point investors will be able to assess its financials to determine the reasonableness of its targeted valuation and decide on potential investments.
See More
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- Amazon's Investment Dynamics: Amazon plans to invest $200 billion this year, although it has only spent $43.2 billion through March 31, focusing mainly on its cloud business and generative AI, demonstrating its ongoing commitment to AI and the capture of market opportunities.
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See More
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- Soaring IPO Expectations: Analysts predict that SpaceX will announce its initial public offering (IPO) in June, targeting a valuation between $1.5 trillion and $1.75 trillion, with rumors suggesting it could reach $2 trillion, potentially making it the largest IPO in history.
- Market Enthusiasm: A money manager highlighted that clients are extremely excited about SpaceX, particularly due to the impressive revenue from the Starlink project, which controls around 70% of the global satellite market, indicating strong profit potential.
- Risks and Challenges: While many analysts are optimistic about SpaceX's future, they caution that its valuation may be too high, with PitchBook estimating a reasonable valuation between $1.1 trillion and $1.7 trillion, urging investors to proceed with caution.
- Lack of Financial Transparency: SpaceX has yet to disclose its financial statements, creating challenges for investors ahead of the IPO; it is expected to file an investment prospectus in May, which will help assess whether its targeted valuation is justified.
See More
Tesla's Robotaxi Progress Slower Than Expected
- Robotaxi Expansion: Tesla's unsupervised robotaxi fleet in Austin grew from 9 to 26 vehicles by the end of April, indicating incremental progress in its rollout plan, which helps build investor confidence despite the slow pace.
- Software Upgrade Plans: The company aims to release version 15 of its FSD software by year-end, which is expected to significantly enhance safety and performance, while the current version 14.3 will be used for gradual fleet expansion, impacting future deployment speed.
- Market Expectation Adjustment: Investor expectations have been reset following management's comments on the robotaxi initiative, meaning any future fleet expansion will be viewed positively, potentially improving the stock's narrative in the market.
- European Market Progress: Tesla's FSD software has received approval in the Netherlands and may gain EU-wide approval, enhancing Tesla's competitive position in Europe and laying the groundwork for future growth.
See More
Used Electric Vehicle Sales Surge 27.7% Amid Price Drops
- Surge in Used EV Sales: According to the latest data from Cox Automotive, used electric vehicle sales jumped 27.7% year-over-year in March and increased by 53.9% from February, indicating a rising consumer demand for EVs, particularly amid high gasoline prices.
- Shrinking Price Gap: The average price of a used EV in March was $34,653, down 6.1% from a year earlier, with the price gap to used gas cars narrowing to just $1,102, suggesting that price parity is approaching, which may attract more consumers to switch to EVs.
- Impact of Lease Returns: The share of leased EVs returning to the market is expected to rise from 2% in 2025 to 8% in 2026, which will increase the availability of used EVs and cater to diverse consumer preferences in the market.
- Maintenance and Insurance Costs: While EVs generally incur lower maintenance costs compared to gas vehicles, battery replacement can cost up to $15,000, and the average insurance for an EV is $4,058, significantly higher than the $2,732 for gas cars, necessitating careful consideration of these long-term expenses by consumers.
See More
SpaceX IPO Valuation Could Reach $2 Trillion
- IPO Expectations: SpaceX is anticipated to announce its initial public offering (IPO) in June, with market predictions suggesting a valuation between $1.5 trillion and $1.75 trillion, and rumors hinting at a potential $2 trillion valuation, which would mark the largest IPO in history.
- Market Reaction: Investors are highly optimistic about SpaceX's IPO, particularly due to its Starlink project controlling around 70% of global satellites, which is expected to generate substantial revenue, although regulatory risks could hinder its market expansion.
- Valuation Challenges: An analysis by PitchBook indicates that SpaceX's fair valuation ranges from $1.1 trillion to $1.7 trillion, significantly lower than its $2 trillion target, presenting investors with considerable risks due to the lack of financial transparency.
- Financial Disclosure: SpaceX is expected to publicly file an investment prospectus in May, at which point investors will be able to assess its financials to determine the reasonableness of its targeted valuation and decide on potential investments.
See More
Impact Analysis of Cloud Giants' Earnings Reports
- Earnings Reactions: Following their earnings reports, Amazon and Alphabet saw stock price increases of 1.25% and 0.27% respectively, indicating a positive market response that reflects growing investor confidence in the cloud computing and AI sectors.
- Capital Expenditure Trends: Alphabet anticipates a significant increase in capital expenditures by 2027, primarily for AI opportunities, while Microsoft plans to invest $190 billion in CPUs and GPUs in 2026, demonstrating the ongoing commitment of cloud giants to AI-driven investments.
- Nvidia's Market Position: Despite facing competition from Amazon's proprietary chips, Nvidia's CEO emphasized the continued deep partnership with Amazon, ensuring strong demand for Nvidia's AI chips, which underscores its critical role in the industry.
- Future Growth Potential: Nvidia's stock has outperformed broader equities over the past three years, with expectations for sustained revenue and earnings growth; despite intensifying competition, its high switching costs and ongoing innovation provide a robust competitive moat.
See More
Cloud Giants Invest Heavily in AI
- Investment Trend: Alphabet, Amazon, and Microsoft are significantly increasing their capital expenditures in AI, with Alphabet's CFO predicting a substantial acceleration in spending by 2027, indicating a strong commitment to AI opportunities that could drive rapid technological advancements.
- Microsoft's Spending Plans: Microsoft anticipates capital expenditures of $190 billion in 2026, primarily for CPUs and GPUs, with CEO Nadella emphasizing the vast potential of the AI market, which will further fuel the company's investments in this area.
- Amazon's Investment Dynamics: Amazon plans to invest $200 billion this year, although it has only spent $43.2 billion through March 31, focusing mainly on its cloud business and generative AI, demonstrating its ongoing commitment to AI and the capture of market opportunities.
- Nvidia's Market Outlook: Despite competition from Amazon's proprietary chips, Nvidia continues to see strong market demand, with CEO Jassy affirming a deep partnership with Nvidia, indicating the irreplaceability of its products in the market and suggesting significant growth potential ahead.
See More
