I don’t need to repeat the analysis that everyone else has made of the prospects for SpaceX, trading symbol of SPCX if it succeeds in going public. But I do need to ask the question: Is it possible that this most-spectacular of initial public offerings would fail?
Generally speaking, if a company gets to the point of publishing an S1 document, then it’s a near certainty that the company will go public. For instance, Google went public with an unusual Dutch-auction approach. It did get public, but it reduced the price of the offering from is expected range by about 20%, harvesting less cash than it wanted. Since then, of course, the value of the company has steadily increased to more than $4T.
The only instance of withdrawing an offering completely was WeWork. And the key parallel to SpaceX was the founder, Adam Neumann, who bullied the directors and banks into writing the S1 and publishing it, at which time everyone was horrified by the machinations and lack of fundamental metrics that institutions refused to commit to buying the shares. The company withdrew the offering, Neumann was fired, and the company has faded in importance, even though it still exists.
The parallel is Elon Musk, who has designed an IPO that allows him to exclusively control the company and continue to do whatever he wants. Musk versus Neumann: The difference is clear. Neumann was a promoter. Musk has actually built two major superstar companies, Tesla and SpaceX, each of which has fundamentally restructured major industries. But he’s on a tear to get this public at a fantabulous valuation, nearly 300 times the value of the company’s EBITDA and even 87 times last year’s revenue.
Clearly, virtually everyone is gobsmacked by the money that can be made in this IPO. Would anyone — bankers, the SEC, institutional investors, the media — just stand up and say this is too dumb for words?
Great piece, Stewart! I'm saying this is too dumb for words, but I'm not a banker, the SEC, an institutional investor or part of the media!