SpaceX has revealed details of its record-breaking IPO. Why is the analyst talking about "squeezed orange"?

Elon Musk's SpaceX is planning to allocate an unprecedentedly large stake to retail investors around the world in preparation for its IPO, Reuters reported, citing sources. However, analysts are urging caution to the general public; one warned that extracting high yields from the aerospace giant's securities will be as difficult as juicing an already squeezed fruit.

According to Reuters interlocutors, the details of the upcoming SpaceX IPO were discussed on the night of April 7 at the first meeting of the company's management with the full pool of banks organizing the offering. According to the sources, SpaceX CFO Bret Johnsen said during the virtual meeting that retail investors would be a critical part of the process and would get a larger share than "in any other IPO in history." The large-scale retail component is a tribute to the people who have long provided "incredible" support to the company and its CEO Elon Musk, the top executive explained.

According to the agency's interlocutors, the schedule of preparations for going public suggests that SpaceX will launch a series of presentations for investors (road shows) in the second week of June. Before the start of the presentation tour, SpaceX top managers will hold a meeting with analysts of underwriter banks. On June 11, Reuters interlocutors say, the world's most expensive aerospace company will hold a large-scale event for retail investors, to which it will invite 1,500 people.

According to the agency, the opportunity to participate in the placement of SpaceX shares will be given to retail investors from the U.S., as well as residents of the UK, EU countries, Australia, Canada, Japan and South Korea. It is assumed that the final structure of the deal and the exact size of the retail quota will be approved closer to the launch of the IPO.

SpaceX left Reuters' request for comment unanswered.

Investors should "think twice" before investing in SpaceX shares after listing, as much of their value is already "built into the price," according to Brin Talkington, managing partner of Requisite Capital Management. With revenues of $16 billion, the company's $2 trillion valuation "just doesn't make any sense," she told CNBC. SpaceX is entering the stock exchange as one of the world's largest players, which means that "the juice from this orange has already been squeezed out," the expert said.

Investment attractiveness of SpaceX IPO is questionable because of the enormous scale of the business, said Stephen Weiss, chief investment officer and managing partner of Short Hills Capital Partners. According to his calculations, to ensure an acceptable return, the company's capitalization will have to grow to $3 trillion, which sounds "ridiculous <...> with such a revenue base."

"It started out as a story about a great capital-intensive company," Bloomberg quotes PitchBook analyst Franco Granda as saying. - And now they're starting to bring in some real sci-fi initiatives, and the numbers don't add up in their (SpaceX. - Oninvest) favor".

SpaceX filed a confidential application for listing with the US Securities and Exchange Commission (SEC) last week, sources told the Financial Times (FT). IPO of the company may become the largest in history: according to insiders FT, the company plans to raise about $75 billion. SpaceX expects to capitalize more than $2 trillion - this will make it more expensive than Tesla and almost all members of the S & P 500 index, except for the top five, argued Bloomberg. However, on April 3, Elon Musk denied rumors about this estimate, advising "not to believe everything that is written".

The filing will allow the listing to take place in June, as Musk intended: his birthday falls in that month, as well as the astronomical conjunction of Jupiter and Venus. For years, SpaceX management has assured that the company will not go public until it launches regular flights to Mars. However, in 2025, the company began to accelerate preparations for listing: funds were needed for the project to build a network of orbital data centers, which should provide Musk leadership in the industry of artificial intelligence, wrote The Wall Street Journal.

This article was AI-translated and verified by a human editor