Latest / The Startup Exit Podcast with Fexingo: IPOs, Acquisitions, and Founder Liquidity Events / How SpaceX Priced Its IPO at 135 Dollars Per Share
Transcript
- Lucas: So SpaceX officially priced its IPO yesterday at $135 per share. The largest IPO in history, and the price itself is one of the most interesting numbers in the whole story. Luna: That is a very specific number. Not $140, not $130. How did they land on $135? Lucas: That's exactly the question. In a traditional IPO, the price is set through book-building with institutional investors. But SpaceX has been doing something different. They ran a modified auction process where they let the market speak, but with a floor and a ceiling. Luna: So it's not quite a direct listing, not quite a traditional IPO. It's like a hybrid? Lucas: Right. They announced a range, took orders, and then the final price came in at $135. That's about 20 times trailing revenue, which is actually conservative for a company growing at 50% year-over-year. But they're pricing in a lot of risk — the Mars timeline is unpredictable, and Starlink's profitability is still ramping. Luna: And what does that mean for the founders and early employees? They've been waiting for liquidity for years. Lucas: That's the big unlock. SpaceX has been a private company for 24 years. Employees have stock options that they couldn't sell. Now, with the IPO, they get a cash-out event. But there's a lockup period — typically 180 days for insiders. So they can't sell immediately. Luna: Right, we did an episode on lockup expirations being the real IPO clock. But $135 — does that feel like a fair price to you? Lucas: I think it's fair-ish. The private secondary market was trading around $125 to $130 recently, so the IPO price is a slight premium. That's actually unusual — typically IPOs are priced at a discount to attract institutional buyers. SpaceX is signaling confidence that demand is there. Luna: And demand seems to be there. The offering was oversubscribed, right? I saw reports that retail investors alone submitted orders for $5 billion worth of shares. Lucas: Yeah, the retail frenzy is real. But the allocation is going to be heavily tilted toward institutions. That's one of the controversies — the little guy gets crumbs. But SpaceX did set aside a small tranche for retail, which is more than some companies do. Luna: So let's talk about what this means for the broader IPO market. We've seen a lot of innovation in exit strategies — direct listings, SPACs, reverse mergers. SpaceX is doing something in between. Lucas: Exactly. And it's forcing other companies to rethink their approach. Take Avataar AI — they just raised funding to build video AI for India's scale. They're watching SpaceX and thinking, 'Do we IPO in two years, or do we look at a direct listing?' The playbook is fragmenting. Luna: And then you have Jeff Bezos's Prometheus, which raised $12 billion to build an 'artificial general engineer' for the physical world. That's a company that might never IPO — it could stay private with tender offers for employees. Lucas: That's the thing. The decision to go public is no longer automatic. Founders have options. They can use secondary sales, earnouts, rolling closes — we've covered all of those. SpaceX's IPO is a reminder that the traditional process still works, but only if you have the leverage to dictate terms. Luna: And SpaceX definitely has leverage. They're the only company with a proven reusable rocket and a satellite internet constellation that's already cash-flow positive. Lucas: Right. So the $135 price is a signal. It says: we know what we're worth, and we're not giving you a discount. That takes guts. Most companies would have priced at $120 to guarantee a pop on day one. SpaceX doesn't care about a pop — they care about a stable, long-term shareholder base. Luna: Speaking of long-term thinking, it's worth noting that we keep these shows free and ad-free because we believe in building a community around intelligent conversations. If you find value in what we do, you can support us at buy me a coffee dot com slash fexingo. That link is in the show notes. Lucas: Absolutely. No ads, no sponsors, just the analysis. And we appreciate everyone who chips in to keep it that way. Luna: Alright, back to exits. So we've talked about SpaceX, but let's zoom out. What other trends are shaping the exit landscape right now? Lucas: One big one is the rise of earnouts. In M&A, buyers are increasingly using earnout structures to bridge valuation gaps. We did an episode on that recently, but it's worth revisiting because it's becoming the norm. Luna: Right, earnouts let the seller get paid more if the business hits certain milestones post-acquisition. It's a way to align incentives. Lucas: Exactly. And we're seeing it in public deals too. For example, when a big tech company buys a startup, they might pay half upfront and half based on revenue targets. That's effectively what SpaceX did with its IPO pricing — they're saying, 'Here's our price, but if you want a discount, wait for the secondary market.' Luna: Interesting. So the earnout concept is bleeding into IPOs. Lucas: In a way, yes. Another trend is the use of tender offers for early liquidity. Before SpaceX's IPO, employees could sell shares in private tender offers at, say, $100 per share. That gave them cash while the company stayed private. Now they get the IPO price, which is higher, but they had to wait. Luna: So timing matters a lot. If you sold in a tender offer six months ago, you left money on the table. But you also had cash in hand earlier. Lucas: Right. And that's the trade-off every founder and employee has to make. Do you want guaranteed liquidity now, or do you bet on a higher price later? SpaceX's $135 price makes that bet look good for those who held. Luna: But not every company will see that kind of outcome. For every SpaceX, there are a dozen companies that IPO at a discount and then trade down. Lucas: Absolutely. That's why the lockup expiration is so critical. When the lockup ends, insiders can sell, and if the stock is trading below the IPO price, there's a flood of supply. We've seen that with many tech IPOs in the last few years. Luna: So what should founders learn from SpaceX's approach? Lucas: I think the lesson is: build a business that has so much demand that you can dictate the terms. SpaceX didn't need to go public — it was already private and profitable. They did it because they wanted to give employees liquidity and raise capital for Starship. If you're in that position, you can price at $135 and call your own shots. Luna: But most startups aren't in that position. For them, the traditional IPO with a discount might still be the best path. Lucas: Exactly. Or a direct listing, which avoids the dilution and lockup. But direct listings work best for well-known companies with strong brand recognition. For a B2B SaaS company nobody's heard of, the traditional IPO roadshow still matters. Luna: So the exit playbook is getting more nuanced. There's no one-size-fits-all anymore. Lucas: Not at all. And that's good for founders. They have more options. But it also means they need to think carefully about which path aligns with their goals. Do they want maximum liquidity for employees? Do they want to stay private longer? Do they want to use earnouts or secondary sales? Luna: And the market environment matters too. With stocks like Apple and Microsoft down this week, the window for IPOs might be narrowing. SpaceX got out just in time. Lucas: Right. The S&P 500 is down about 3% in the last five days. That could have affected demand if SpaceX had waited another month. But they priced yesterday, and the stock opens for trading today. We'll see how it trades. Luna: I'll be watching. Thanks for breaking it down, Lucas. Lucas: Thanks, Luna. And if you want to support the show, you know where to find us.