Latest / The Startup Exit Podcast with Fexingo: IPOs, Acquisitions, and Founder Liquidity Events / The SpaceX IPO Windfall and Who Really Benefits
Transcript
- Lucas: So SpaceX is heading toward an IPO — reportedly as soon as late this year — and the headlines this week are all about who stands to benefit. Spoiler: it's not going to be you or me buying a few shares on Robinhood. Luna: Right, TechCrunch had a piece yesterday basically saying Elon Musk and a handful of insiders will capture the vast majority of the upside. But how does that actually work in practice? Lucas: It's a great question, and it gets at something fundamental about how IPOs really function — especially for founder-controlled companies. SpaceX is reportedly targeting a valuation somewhere north of three hundred billion dollars. Maybe three-fifty. But the shares that trade on day one won't be equally available to everyone. Luna: Because of the share structure, right? SpaceX has multiple classes of stock with different voting rights. Musk holds something like forty percent of the voting power. Lucas: Exactly. And that's not unusual for high-profile tech IPOs. Facebook, Snap, Alphabet — they all had dual-class structures that concentrated voting power with founders. But SpaceX takes it a step further. There are reports that certain early investors and employees have shares with liquidation preferences that could dramatically alter who gets paid and how much. Luna: So the average employee — the engineer who's been there for five years — they might have common stock that's subordinate to preferred shares held by venture capitalists or even Musk himself. Lucas: That's the risk. And then there's the allocation process itself. When SpaceX files its S-1, the investment banks — likely Goldman Sachs, Morgan Stanley — will allocate shares to their biggest institutional clients. Hedge funds, pension funds, mutual funds. Retail investors typically get access through a small portion set aside for platforms like Robinhood or Fidelity, but it's a tiny fraction. Luna: So even if the IPO pops fifty percent on day one, most individual investors won't get in at the offering price. They'll be buying in the open market after the pop has already happened. Lucas: Precisely. And that's the rub. The people who truly benefit from the IPO are the insiders who can sell shares in the offering itself, and the institutional investors who get allocations. The founder, early backers, some top executives. The TechCrunch article cited a source saying that Musk alone could sell a portion of his stake worth tens of billions — though given his history, he might not sell much. He tends to hold. Luna: But there's another layer here: SpaceX has been doing secondary sales for years. Employees and early investors have already been able to cash out on private markets. So by the time the IPO happens, a lot of the liquidity event has already occurred. Lucas: That's a critical point. SpaceX has facilitated tender offers — periodic opportunities for employees to sell shares to outside investors at a valuation set by the company. So someone who joined in 2015 could have sold shares at a hundred billion valuation, then two hundred billion, then two-fifty. The IPO is just the final capstone. Luna: Which means the real windfall for rank and file employees might have happened years ago. The IPO itself is more about the founders and the late-stage investors who bought in at high valuations and need a public exit to realize their returns. Lucas: Right. And then there's the question of what happens to the stock post ipo. Will SpaceX be a long-term compounder like Amazon, or will it struggle under the weight of its own complexity? Musk himself has said repeatedly that SpaceX's goal is to get to Mars, not to maximize shareholder value. That's a very different mission statement than your typical public company. Luna: Speaking of which — let's take a quick step back. We're able to have these conversations because listeners support the show directly. If today's episode was useful to you and you want to keep it ad-free, buy me a coffee dot com slash fexingo helps. We really appreciate it. Lucas: Yeah, absolutely. It's what keeps us independent. So back to SpaceX — the other big angle is how the IPO might affect the broader market for space-related stocks. Luna: You mean like the SPACs that went public a few years ago? Virgin Galactic, Astra, Rocket Lab? Lucas: Exactly. A lot of those companies went public via SPAC at high valuations and have since cratered. Virgin Galactic is down something like ninety percent from its peak. But a successful SpaceX IPO could reignite interest in the sector. It's a double-edged sword — it validates the space economy, but it also highlights how far behind the competition really is. Luna: And how does the broader market backdrop play into this? We're in May 2026 — the S&P 500 has been choppy, interest rates are still relatively high. Does that affect the timing? Lucas: It does. A company like SpaceX can pick its window. They don't need the money — they're generating revenue from Starlink and launch contracts. So they can wait until market conditions are favorable. But there's also pressure from insiders who want liquidity. The longer they wait, the more risk that something goes wrong — a launch failure, a regulatory crackdown, a broader market downturn. Luna: And there's the Elon factor. He's already tied up in Tesla, X, Neuralink. Having another public company adds scrutiny, reporting requirements, potential distractions. Some investors might worry about bandwidth. Lucas: Sure. But let's look at the numbers we have. Tesla's stock is down about one percent over the past five days, sitting around four hundred and seventeen. That's not dramatic. But it's a reminder that Musk's public companies are volatile. SpaceX would likely be even more volatile initially — given its mission, its dependence on government contracts, and its founder's personality. Luna: So who should be excited about this IPO? Is it really just for the ultra-wealthy? Lucas: For the initial allocation, yes. But that doesn't mean retail investors can't participate eventually. After the lockup period expires — typically six months — insiders can sell more freely, and the stock becomes more widely traded. If you're patient, you might be able to buy at a more reasonable valuation after the initial hype fades. Luna: That's assuming the stock doesn't just keep going up. Look at what happened with Amazon — if you waited for the hype to die down, you missed the boat. Lucas: True. But Amazon's business model was proven and growing. SpaceX's revenue profile is still heavily dependent on Starlink — which is a capital-intensive subscription business — and government launch contracts, which are lumpy and subject to political winds. It's not apples to apples. Luna: So what's the one thing you want listeners to take away from this episode? Lucas: That an IPO is not a democratic event. The people who benefit most are almost never the ones buying shares on the day of the IPO. If you want to invest in SpaceX, the smartest play might be to wait until the story settles — after the lockup, after the first few earnings calls — and buy on your own terms, not the banks'. Luna: Solid advice. And with that, we'll leave you to think about whether you'd rather own a piece of a Mars rocket or just watch from Earth. Lucas: Thanks for listening, everyone. We'll be back with another episode soon.