Elon Musk’s rocket and artificial intelligence company SpaceX pulled off the biggest initial public offering in history on Friday, raising $10bn (£7.5bn) more than initially thought – bringing the total to $85.7bn.
The listing had initially raised $75bn from investors, money that Musk told employees would be spent funding a “significant growth phase”. But the banks that backed the IPO exercised a so-called “greenshoe” clause – a financial mechanism also known as an overallotment option – which let them purchase an extra $10bn of SpaceX shares.
“SpaceX raised $85.7bn in its IPO, $10bn more than initially thought, after banks exercised a greenshoe option.”
When a company goes public in a highly anticipated listing, investor demand can outstrip the initial supply of shares. To prevent wild price swings and ensure a smoother launch, a greenshoe agreement lets the banks handling the listing sell more shares than originally planned. In SpaceX’s case, appetite was exceptionally high. The underwriters, which included Goldman Sachs, Bank of America and JPMorgan, exercised the option in full, purchasing an additional 83.3 million shares directly from the company to meet the huge demand.
The extra $10bn raised – revealed in a statement by SpaceX announcing the completion of the listing – would by itself rank as one of the biggest IPOs in history.
The listing also saw Musk elevated to trillionaire status, according to Bloomberg calculations. But because the vast majority of Musk’s wealth is directly tied up in SpaceX equity, his new milestone status remains entirely dependent on the market. A sharp decline in the stock could strip him of the title just as quickly as continued gains could multiply it.
Momentum behind SpaceX continued on Monday, with shares surging by more than 19% to $192. They were first offered to investors at $135, valuing the company at $1.8tn.
Analysts have warned that SpaceX’s sky-high valuation leaves little room for error, raising questions over whether the loss-making company can sustain its current growth amid growing regulatory scrutiny and rising competition in the commercial space sector.