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On June 1, SpaceX issued an amended registration statement for its upcoming IPO that contains a couple of noteworthy additions to the original filing submitted two weeks earlier. In one new provision, the rocket and AI giant announced that it will reserve 5% of the offering\u2019s shares for \u201ccertain employees and persons\u2026 which may include parties with whom we have business relationships and friends and families of our executive officers.\u201d The document adds that these grants \u201cwill not be subject to a lockup restriction.\u201d In other words, the folks who receive these allocations, unlike Elon Musk and top execs who can\u2019t sell for around a year, are free to unload their holdings any time after SpaceX\u2019s debut, slated for mid-June.<\/p>\n
These recipients could pocket gigantic windfalls overnight. It\u2019s now widely reported that in the IPO, SpaceX will issue 555.6 million shares at $135 each to raise roughly $75 billion. So it\u2019s handing friends and family the right to buy $3.75 billion in shares (5% of $75 billion) at the insider price paid by investors, primarily anointed big institutions, that purchased in the underwriting phase. How much the executives and friends and family folks pocket right away depends on how much SpaceX\u2019s stock pops on day one. Of course, we don\u2019t know what will happen to SpaceX shares once the bell rings at the Nasdaq. A substantial rise over the pre-trading price would send the valuation into the stratospheric $2 trillion range or higher.<\/p>\n
But IPO jumps typically average around 20%, and a strong pop is highly valued by both issuers and book-running bankers as the hallmark of the deal\u2019s success. If SpaceX scores a 20% bump, the group would reap an immediate gain of $750 million. At 30%, we\u2019re talking $1.125 billion. And once again, they\u2019re free to exit at any time.<\/p>\n
An extra surprise buried in the amended S-1 could provide a pivotal clue for SpaceX\u2019s future plans. It\u2019s a single new sentence on page 51, in the \u201cAcquisitions, Divestitures and Other Strategic Transactions\u201d section. SpaceX states, for the first time, that it \u201cmay issue a significant amount of equity in connection with future transactions.\u201d A number of Wall Street observers noted that this declaration is too strong to be dismissed as boilerplate language, and suggested that it boosts the probability that SpaceX will purchase Musk\u2019s second largest holding, Tesla. This writer explored this strong possibility in a piece last week.<\/p>\n
The \u201cmay issue a significant amount of equity\u201d alert trained the spotlight on a big potential deal SpaceX had already discussed in the first S-1, but didn\u2019t then attract much notice: Its option to purchase venture-backed AI coding assistant Cursor for $60 billion in an all-stock transaction. The acquisition looks highly likely, since if SpaceX cancels, it\u2019s agreed to pay a total of $10 billion in breakup and service fees. The looming buy raises a red flag for SpaceX shareholders; a Cursor buy would dilute their holdings by around 3.5%. It\u2019s also a reminder that SpaceX intends to prove extremely adventurous in deploying what could be vastly overvalued shares as currency for expansion. Once again, SpaceX would be betting big on a business requiring gigantic future growth to pay off. Cursor\u2019s profits aren\u2019t publicly disclosed, but at $60 billion, SpaceX would be paying an immense 20 to 30 times this hotshot\u2019s current run rate for revenues.<\/p>\n
That brings us back to a possible SpaceX-Tesla combo that would mark the biggest merger in history. If both sides\u2019 investors received stock in proportion to the current market caps, SpaceX\u2019s shareholders would be surrendering around 45% of their company, and paying a PE of over 400, to swallow the EV-maker that posted a puny $3.9 billion in net profits over the past four quarters.<\/p>\n
The sentence that sprouted in the amended S-1 highlights that SpaceX plans to capitalize on what the math deems a highly inflated stock to do big deals, maybe including the biggest ever. The problem: It\u2019s potentially targeting incredibly expensive candidates where most of the value rests just as it does at SpaceX, not in current profitability, but hope for the future.<\/p>\n
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#single #sentence #SpaceXs #amended #IPO #filing #signal #biggest #merger #history<\/p>\n","protected":false},"excerpt":{"rendered":"
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