It’s SpaceX IPO Day!
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What is the significance of SpaceX's IPO?
It's SpaceX IPO day and Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoy. I'm joined today by Lou Whiteman and John Quast. And we have to start with the news of the day. That is the SpaceX IPO. This has been coming for a while. It's been a huge topic. Retail investors, who are the people that we talk to, are going to be a huge, huge piece of this. So I want to go through kind of an overview and... Get all the way down to when are some of these big owners going to sell? But Lou, let's start here. For investors who are maybe new to this IPO process, who've never bought an IPO or a stock that has started their initial trading, like SpaceX is going to do today, what is an IPO and why is it important?
So an IPO, initial public offering, is the process through which a private company becomes a publicly traded company. All companies have shares, private or public. But before the IPO, SpaceX shares were held by investors who had invested early on, venture capitalists, insiders, not easily traded on the open market. So what SpaceX is doing is they're selling a small sliver of themselves, some percentage of their shares. In this case, you know, I think under 10 percent. Over time, all of the shares will become tradable. This allows both retail investors like us, non-venture capitalists to get in. It also allows for big holders to get out. So it is it's just the process of becoming more easily tradable or as we call it publicly.
Yeah, we'll get to that selling piece in just a moment. But John, why is this IPO in particular such a big deal?
Because it's the biggest IPO of all time and it's not even close. So 2019, Saudi Aramco went public in its IPO. It raised about $25 billion. SpaceX is looking to raise $75 billion. So three times the size of the last biggest IPO. So this is absolutely enormous. And when you think about the timing here, I know we're going to get into this more, but when you look at Anthropic, OpenAI, also looking to go public in the near future, you look at even a company, we shouldn't forget about SK Hynix from South Korea, looking to go public here in the US. It's already publicly traded in Korea, but... publicly traded here in the US at maybe a trillion dollar valuation as well. So we have a cluster of four potentially trillion dollar companies going public at the same time, maybe 200, 250 billion raised in IPO proceeds all at once.
That's I don't know.
Who are the key stakeholders selling SpaceX stock?
We haven't seen that before.
Lou, this does seem like a unique moment. And we had a little bit of this during the pandemic. There was a lot of those SPACs, SPAC mania. That was very different companies that it seems like we have today. SpaceX is a very real company. doing very real things. We've done shows, if you want some deep dives, we have some of those in the back catalog for Motley Fool Hidden Gems Investing. And you're going to be doing some content on the Motley Fool today and over the next few weeks or so about this. But this is a moment where you're going to see potentially three... trillion dollar companies coming to public markets in 2026. The scale of that is just something we've never seen.
Yeah, this is not what the IPO market was made for, if we're honest. And some of these things, all this talk about, well, they're bending these rules, they're changing these rules. I'm sympathetic to that, but also the rules never envisioned companies this size. it's important to say, yes, a lot of money is coming on. There's a lot of questions. And I don't think any of us really know the answer to what this will do for the market. Cause it should pull money away from elsewhere. Uh, by the St. Louis fed, there is a trillion dollars on the sidelines as they call it. That's money and money markets. Not all of that is looking to get in, but there is a buffer there. Uh, I'm trying to do the back of the envelope.
If all three go public, what we're thinking, maybe five to six percent of total market capitalization of the of the U.S. markets. So not that's a huge number, but it's not a relatively massive number.
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