SpaceX Considers Public Offering

SpaceX is reportedly engaging four major Wall Street banks for a potential Initial Public Offering (IPO) in 2026. This development could signal a revitalization of the public markets following an extended period of low IPO activity. The company's valuation reportedly reached $800 billion during a recent tender offer, with strong interest in secondary markets pushing prices higher, potentially towards a $1.5 trillion IPO valuation.

Elon Musk's stance on taking SpaceX public has reportedly evolved, influenced by favorable market conditions and the company's extensive growth prospects. SpaceX's diverse operations, including its dominant rocket-launching services, the Starlink satellite internet constellation, and the Starship program, represent significant market opportunities.

Any public offering is anticipated to be a "sliver deal," making a limited percentage of shares publicly available, which would allow Elon Musk and a core group to maintain control of the company.

Growth of Secondary Markets

The secondary market for shares in private companies has expanded significantly as companies opt to remain private for longer periods. This market facilitates liquidity for employees and early shareholders while offering investors access to shares in substantial private entities. Key companies like OpenAI, Anthropic, ByteDance, Stripe, and Databricks are also experiencing substantial activity in secondary trading.

Greg Martin, managing director at Rainmaker Securities, noted that news regarding potential mergers involving SpaceX, xAI, and Tesla temporarily impacted SpaceX secondary market activity as investors assessed implications. Martin indicated that private companies are increasingly utilizing secondary markets for price discovery prior to an IPO, aiming for more efficient public offerings.

He also elaborated on secondary transaction mechanisms, including the use of Special Purpose Vehicles (SPVs) to trade economic ownership units rather than direct shares, thereby managing cap tables. Sophisticated investors evaluating pre-IPO shares seek comprehensive due diligence on financials, management, cap table structure, and supply-demand dynamics. Increased information transparency for investors is believed to reduce risk and stimulate market activity.

Valuation and Market Signals

SpaceX is expected to receive a premium valuation, partly attributed to an "Elon halo effect," reflecting confidence in Elon Musk's capacity to execute ambitious projects. This is anticipated despite certain past projections not yet being fully realized.

Beyond engaging banks, additional indicators of a company preparing for an IPO include the hiring of senior executives with public company experience, such as a Chief Accounting Officer or a new Chief Financial Officer, and the expansion of investor relations, accounting, and legal teams.