After historic IPO, SpaceX faces its first test on wall street

SpaceX begins trading on Nasdaq Friday, and the real scrutiny starts now. After investors poured $75 billion into the world's largest-ever IPO, pricing shares at $135 and valuing the company at $1.77 trillion, the market must now decide whether that number holds up once the stock actually starts moving.

Despite recording losses totalling almost $5 billion last year, SpaceX's revenues constitute a small portion of what similar tech companies earn. Moreover, SpaceX's initial public offering has brought in more money than even Saudi Aramco's record-breaking IPO in 2019.

Analysts from Morningstar estimate that a more reasonable value for SpaceX would be approximately $780 billion, which is just half of the initial market value.

As Laffer Tengler Investments CEO Nancy Tengler put it, this isn't a stock bought on fundamentals; she compared it to early Amazon, a company that "changed the way we live".

Stocks are not anticipated to begin trading until around mid-day, as the stock exchange matches buyer and seller orders prior to underwriters initiating the sale of the stock to ensure that the system does not suffer the technical issues seen during Meta’s 2012 stock listing.

SpaceX listed 555.56 million stocks during this offering; however, underwriters reserve the right to offer more shares during the next thirty days, potentially driving up the valuation.

The stock will likely be added to the Nasdaq 100 index at a fast-tracked rate within about a month, bringing in new interest via passive index funds even as S&P 500 membership seems farther away.

Many believe SpaceX’s stock market listing will cause a shift in portfolio allocation by investors, causing funds to divest from some of their top holdings to accommodate the new company.