Manager of Scottish Mortgage Tom Slater said that since Musk has publicly come out and given 2026 as the IPO goal then that 'has to be the central case' investors work with Credit: iStock
Private equity giant SpaceX is expected to debut as a public company sometime this year, but commentators and investors anticipate this will be down to the market conditions rather than its founder's reported astrological vision.
Reporting by the FT this morning has pipped June as the long awaited IPO date, based on conversations with people familiar with the matter that Elon Musk wants the event to coincide with a rare planetary alignment (8-9 June) and his birthday a few weeks later (28 June).
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Talks over a private assets sale at the end of last year put SpaceX at an $800bn valuation, however it is reportedly looking to raise $50bn when it does IPO, which would give it a $1.5trn valuation. It is already the largest private equity company in the world and if these figures came to pass, it would make it the biggest public company ever.
But those eyeing up the IPO expect it will come down to whether or not the market is favourable versus any planetary or celebratory events.
"If equities are enduring a bout of volatility there might have to be a rethink," said AJ Bell investment director Russ Mould.
He highlighted that the practical steps needed to take a company public, and the bureaucracy involved could be another obstacle given the "relatively tight" June turnaround.
"What does seem clear at this point is SpaceX is moving ever closer to being a public company," Mould added.
Scottish Mortgage investment trust manager Tom Slater echoed Mould's points during a presentation in London earlier this month (16 January), that market conditions would be paramount to when the IPO occurs and additionally practically, whether the business is ready to do it or not.
Slater said that since Musk has publicly come out and given 2026 as the IPO goal, then that "has to be the central case" investors work with.
Scottish Mortgage's Tom Slater backs case for larger SpaceX position
SMT first invested in SpaceX in 2018, and the managers have had a longstanding relationship with Musk himself having been early investors in Tesla, a dynamic they tout as key to them being allowed to buy into the rocket business so early.
At present, SpaceX makes up 15.2% of SMT, taking up half of the trust's private equity limit.
Slater said that the portfolio has not been this concentrated in a stock since Tesla in 2020 – at 12% - and "typically" it would not be so highly invested in one name.
However, "we are not going to be in a rush to make that decision just on the basis of updating the book value", Slater said.
"It is important that we, first and foremost, think about upside from here", he said and for SMT, would not only be a healthy realisation of potential profits but SpaceX's IPO would immediately open up a huge space for additional private investments as it continues to bump against – and break – its 30% limit.
