SpaceX stock jumped 11% when trading opened Friday, catapulting the rocket company into the ranks of America's ten largest corporations on its debut day.
Shares priced at $135 late Thursday, but immediately climbed to $150 in early trading. That valuation translated to a market capitalization of $1.97 trillion, instantly positioning SpaceX among the nation's most valuable firms.
The size of the offering is staggering. If SpaceX were added to the S&P 500 today, it would represent more than 5% of the entire index based on current valuations.
Elon Musk struck a measured tone about the company's prospects ahead of the debut. "I gave SpaceX less than a 10% chance of succeeding at all to be clear," he said, though he emphasized the venture was worthwhile as a step toward building a "space-faring civilization."
Wall Street analysts are divided on whether the stock's explosive opening reflects genuine value or pure hype. SpaceX is trading at 90 times its sales, a multiple that concerns some investors. Adam Johnson, a portfolio manager at the Bullseye American Ingenuity Fund, told Axios the valuation appears disconnected from actual business fundamentals.
History offers cautionary notes. According to research from University of Florida finance professor Jay Ritter, most companies that go public underperform the broader market over their first three years. Yet the current market environment has upended traditional valuation disciplines, particularly in sectors linked to artificial intelligence and cutting-edge technology.
"Hype is a borrowing, if you will, in the short term against future performance, so some companies will repay it," said Isabelle Freidheim, founder of Athena Capital, in remarks to Axios. The top performers in the S&P 500 are nearly all commanding premium valuations relative to their earnings.
The real test comes when SpaceX's lock-up period expires. Early investors face restrictions on selling their shares, but those limitations won't last forever. Insiders can begin unloading as much as 20% of their holdings starting the second full trading day after the company's next earnings report. General investors can sell 180 days after the IPO, though Musk himself remains locked in for 366 days.
"The lock up ends fast, so once insiders can sell, we'll see who's left holding the bag," Sarah Kunst of Cleo Capital told Axios. That window could determine whether enthusiasm sustains or evaporates once early backers rush for the exits.
Author James Rodriguez: "The stock's gotten everything right except the part that actually matters: proving it can make money at these prices."
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