The Space X IPO
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What is the main topic discussed in this episode?
The Clare Byrne Show on Newstalk. With Aviva Insurance.
And you're listening to Ciara Doherty on The Clare Burns Show this morning. Now, if all goes according to plan, Elon Musk will become the world's first trillionaire today. The initial public offering of his rocket, satellite and AI company SpaceX is the biggest in history. It's expected to raise more money in one day than the annual economic output of many nations. A whole bunch of people in Musk's orbit are going to get very, very rich or even richer today. And millions of regular people are about to become SpaceX investors, even though they may not realise it. Well, joining us to discuss this now is Emmett Oliver, business correspondent. Emmett, lovely to speak to you. So we've already had a sort of an initial offering here, about 75 billion of shares prior to this IPO.
It was massively oversubscribed, which seems to suggest there's going to be real demand for this.
What is the significance of SpaceX's IPO for Elon Musk?
Yes, good morning Ciara. Absolute mania is the only way to describe it and it's global. We know that Elon Musk has a very enthusiastic, almost cultish following from a lot of people in the US who like his Tesla cars for starters. But this has moved up another notch again. As you say, about 25% of these shares are going to be allocated to what they call ordinary retail investors. So that's me and you and people sitting at their computers who trade just kind of casually if they have some extra money. Those people are going to be bundled into this and there's obviously a lot of enthusiasm. They're not doing it because they're being forced, those retail investors, but they're very enthusiastic about Elon Musk.
But what he's selling, Ciara, is two particular things. Data centres that are out in outer space. orbiting the Earth. So that's one particular business line that he's hoping can come true in the next few decades. And the second one is a reusable rocket called the Starship, the SpaceX Starship. So this will be a rocket that will go off like an aircraft, a commercial aircraft will go around space delivering things possibly to Mars and possibly launching satellites as well, very heavy ones. And that will be reusable and obviously the people will pay to get use of that and it'll generate a lot of revenue as well. So these are the two things he's selling to these investors. They're not going to pay off immediately.
Some people say they may never pay off. But at the moment the company is loss making. It loses several billion dollars a year. So a lot of it's based on future investment. So you're taking a risk on future earnings.
Emma, do you have a sense that the share price here, which is $135, is in fact way overvalued, given so much of this technology hasn't actually been brought to full fruition yet?
No, I think you're investing in the dream, you know, that that is what you're essentially doing. And sometimes dreams pay off and sometimes they don't, you know, so that's the risk. There's a very influential note out this morning from a company called Morningstar, a big fund manager, saying, And they say the shares are valued at $63 per share, not $135 per share. So that's the fundamental value of the company. But you're basically not investing in a company, Ciara. You're really investing in Elon Musk, the person. He controls 84% of the voting shares of the company. He effectively can't be fired. He doesn't really have a board of any kind in any independent sense. So it really comes down to whether you think his visions that he's selling, which I've kind of outlined the two main pillars of those, whether you believe they will come off, whether they will pay off and how long it will take before they pay off.
I mean, the idea of putting data centers into space is extraordinary. I mean, as you know, most data centers are huge. several football pitch lengths in total.
How is the demand for SpaceX shares impacting investors?
Can you put those into space? What about cooling them down? I mean, data centers use the air. A lot of them are based in Ireland, of course, for our nice Atlantic air that cools them down. Can that be done in space?
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:01–1:04
2
What is the significance of SpaceX's IPO for Elon Musk?
1:04–3:40
3
How is the demand for SpaceX shares impacting investors?
3:40–6:32
4
Why are retail investors excited about SpaceX's IPO?
6:32–8:12
5
What innovative technologies is SpaceX focusing on?
8:12–8:20
Speakers
3 identifiedMore from The Claire Byrne Show
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