What's the optimal timing for a SpaceX IPO?

[ArbitraryConstant]

IIRC, employee option holders will be locked out for 30 or maybe more days, so you need that initial buoyancy in the shares to keep people happy.

I don't know what SpaceX uses, but if they grant RSUs instead of options the above point is much less relevant.

In that case the only people with a problem if there's no big bounce are bankers that want to get a big score flipping shares at the IPO. That explains a lot of the negative commentary from financial pundits when it happens, but I'm not seeing the problem for SpaceX in that event. SpaceX would have already sold the shares at the IPO price. Employees might be less happy than at a higher price, but with RSUs they don't realize a loss.

[Tea Party Space Czar]

<snip>

no money in Solar unless the check comes from the government.

The same could be said about Commercial Cargo and Crew. 

The same could be said about the commercial airline industry.

The same could be said about the railroads.

I would contend that the government was correct to help spur innovation in this area, especially with businessmen who have a proven track record of bringing new technologies to market, and that Solar City does have an affordable product that people will use and take advantage of.

Tesla paid back its loan to the government - Solyndra did not.   This is just one example.

I have no problem with the government making wise decisions about building new markets in conjunction with government needs.  The government needs access to LEO.  The commercial sector can do that.  If the commercial sector can use that technology that was built with federal dollars and create the market - fantastic.

We at TPiS think it can - and it will.

This may be OT and if it is, I apologize. 

Respectfully,
Andrew Gasser
TEA Party in Space

edit:  Personally, I do not want SpaceX going public.  Keep it with the powers that be.  I would hate to see the company ruined by bean counters who do not appreciate science.  (No offense Bean Counter

[ArbitraryConstant]

edit:  Personally, I do not want SpaceX going public.  Keep it with the powers that be.  I would hate to see the company ruined by bean counters who do not appreciate science.  (No offense Bean Counter

Not sure I see the problem. Musk would simply retain a controlling interest as he has with Tesla.

[krytek]

Markets time IPOs. Realize that a company has to get a brokerage to do the IPO - if the brokerage thinks the timing is wrong, they ain't gonna do it. Or they're going to give you a dog of an IPO price. You also have to road-show your company for a few weeks prior. It's a giant distraction from doing actual business.

So, it's actually akin to the rocket business in a sense. You IPO when you're ready. Not before.

Google did it through a Dutch auction, which made them non grata with brokers, but they didn't really raise as much money that way.

Elon was on CNBC this morning talking about his Solar City IPO, so it looks like he's trying to sneak in under the wire before the investment public realizes we're in a recession right now.

no money in Solar unless the check comes from the government.

Solar City doesn't do any manufacturing. They don't need a check from the government (even though they got a billion dollar contract from them).
It's a service based company. They offer counseling, loans, installation and monitoring.

[BobCarver]

edit:  Personally, I do not want SpaceX going public.  Keep it with the powers that be.  I would hate to see the company ruined by bean counters who do not appreciate science.  (No offense Bean Counter

Not sure I see the problem. Musk would simply retain a controlling interest as he has with Tesla.

Agreed with both. No bean counters should ever be in control and Musk should retain controlling rights. This should be possible by selling shares to the public which have no voting rights, or very diluted voting rights.

[wolfpack]

I don't know what SpaceX uses, but if they grant RSUs instead of options the above point is much less relevant.

Not sure, to be honest. The IPO I was involved with was pre-RSU timeframe (before the SEC had option expensing rules). The other startup I was involved in was subsequently purchased in 2011, so did not IPO. I did buy options in it, however, not RSUs. Those were converted to cash at sale time and in subsequently disbursed at intervals per the purchase agreement. It is accounted for on IRS Schedule K-1 since the structure was a partnership. In fact, I get to have that fun again this tax year! I know a CPA who's gonna make another $500 off of me.

Regardless of that, I'm sure the SpaceX folks know what they've got. I'll also caution them that the California Dept of Revenue is an abomination. It took 6 months and TWO letters from my CPA to get them to agree that I paid taxes. And I live in North Carolina! 

[Elmar Moelzer]

http://www.freshdialogues.com/2013/01/23/elon-musk-on-spacex-ipo-environment-flying-cars/

Elon explained that he’s not in a hurry to make SpaceX a public company because the short term desires of shareholders would conflict with the company’s longer term goals (which included manned space flights to Mars).

[QuantumG]

For anyone who cares: http://shitelonsays.com/transcript/computer-history-museum-presents-an-evening-with-elon-musk-2013-01-24

No, there's no IPO planned. Running a public company does have it's drawbacks. In the case of Tesla and Solar City, we had to raise capital and we had kind of a complex equity structure that needed to be resolved by going public and I thought we kinda needed to do that in those two cases. We don't have to do that at SpaceX. I think there's a good chance that we will at some point in the future, but SpaceX's objectives are super long term and the market is not. So, I'm a bit worried that if we did go public too soon that market pressure would force us to do short term things and abandon long term projects. Going to Mars is very long term.

The rest of the interview is (disappointingly) the same questions as the last two interviews and the same answers. If interviewers keep doing this I'm going to have to assume that they're getting the questions given to them in advance (which is just pathetic in my book).

[RocketmanUS]

For the IPO.

Were the early employees given stock for part of their pay?
How about employees as of lately?

[mr. mark]

SpaceX now valued at 4-5 billion dollars.

"Musk is famously the only man besides Jim Clark to found three billion dollar companies including his original win with PayPal – four if he would give himself credit as the chairman and largest investor in Solar City. Not bad for a 13-year career".


http://pandodaily.com/2013/03/20/dfj-led-a-30m-shareholder-liquidity-round-that-valued-space-x-between-4-5-billion/

[JBF]

That is an interesting article, but the important take away is not the "value" of SpaceX, but the fact they have small stock sales every 6 months or so for employees who want to sell.

[Linze]

IPOs are for when someone wants to "cash out." As Elon is still doing a bang-up job. That will not be for awhile.

That's true of some, but certainly not true of all IPOs.  Not by a long shot.

A great many IPOs have been used to fund a corporation's expansion while also reimbursing long suffering employees.  The SpaceX IPO will probably look far more like Google's IPO than most tech IPO's.  For founders who wish to keep running their businesses, 'cashing out' isn't even on their radar.

Musk has always said that SpaceX is about getting to Mars, not about returning or maximizing profits.  Expect any prospectus to make those goals abundantly clear. 

It will be difficult for SpaceX to maintain those goals post-IPO unless Musk has a strong voting majority.  This is why SpaceX may emulate Google's IPO, where the founders awarded themselves premium shares with 10 times the vote per share.  This allows the Google boys complete control of their company with only minimal holdings.

This structure is thought to have lessened the amount of revenue their IPO brought in, for them, retaining control was worth the reduced returns.  One expects Musk will take a very similar tact.  Musk's goals are far more anti-investor than those of the Google founders, suggesting voting control is even more important to him that it was to the Google founders.

As for an IPO date, my guess would be sometime after a successful Falcon Heavy launch later this year.  That is, if it's successful and if the world economy hasn't been sucked back into recession.  If the stars align, valuation could be quite a bit higher than 6 billion.

[JBF]

As for an IPO date, my guess would be sometime after a successful Falcon Heavy launch later this year.  That is, if it's successful and if the world economy hasn't been sucked back into recession.  If the stars align, valuation could be quite a bit higher than 6 billion.

As they are having stock sales for employees I don't see them ever having an IPO unless they have to raise cash to get to Mars.

[ArbitraryConstant]

As they are having stock sales for employees I don't see them ever having an IPO unless they have to raise cash to get to Mars.

As the number of shareholders increases many of the reporting requirements will kick in regardless of whether they are traded on a public exchange.

Musk will retain a controlling interest in the company just like Zuckerberg did with Facebook.

And just like Facebook, Musk can continue to pursue the vision even with a publicly traded company provided that vision is spelled out and clearly communicated to the public in their SEC filings.

[Linze]

As the number of shareholders increases many of the reporting requirements will kick in regardless of whether they are traded on a public exchange.

Exactly.  I can't recall the exact shareholder limit, but it's somewhere in the low hundreds.  Once there, public filing is required, minimizing many of the advantages of staying private.  SpaceX hasn't hit those reporting limits yet, so those benefiting from the stock sale would have to have been a very small percentage of their workforce.

As you say, Musk will retain full control, and from his statements, seems to have been ready to have an IPO for some time. 

SpaceX's largest commercial milestone for perhaps the next 3 to 4 years will be the upcoming launch of the Falcon Heavy with the new, more efficient and powerful Merlin.    Given that Musk has seemed ready to IPO for some time, that seems a very obvious time to float the company.

[Ludus]

Interesting that the market cap of Tesla Motors TSLA is as of now significantly higher than the Fiat group which has about 200k employees and revenues of almost $80B, $23B in cash...along with a very effective CEO, control of Chysler in the US and iconic brands like Ferrari.

Solar City is trading over $25, 3x it's ipo price from only last December.

Musk's twitter account now has over 200k followers.

If market confidence in his other businesses is any indication, this is not a bad time right now.

[jnc]

Interesting that the market cap of Tesla Motors TSLA is as of now significantly higher than the Fiat group which has about 200k employees and revenues of almost $80B, $23B in cash...along with a very effective CEO, control of Chysler in the US and iconic brands like Ferrari.

"Irrational exuberance" (I think that was the phrase), anyone? (I seem to recall during the .com boom, reading one day that Cisco's market cap was more than GE. I sold most of my Cisco the next day... :-) Time to sell Tesla short... :-)

Noel

PS: (To keep on topic): I wonder if he's thought of selling some of that stock (at the current probably-unrealistically-high price) to put some more capital into SpaceX? I don't know what his deal is on the Tesla stock, maybe he's not allowed to sell it, or something, though. And if he sells too much, he might lose control. But I have to guess that if he had to chose between the two, SpaceX is probably more important to him.

[llanitedave]

Kind of interesting that in this day of a struggling recovery there could be "irrational exuberance" over any company.  Part of me is glad to see it.  Part of me indeed is waiting for the other shoe to drop.

[BobCarver]

Interesting that the market cap of Tesla Motors TSLA is as of now significantly higher than the Fiat group which has about 200k employees and revenues of almost $80B, $23B in cash...along with a very effective CEO, control of Chysler in the US and iconic brands like Ferrari.

"Irrational exuberance" (I think that was the phrase), anyone? (I seem to recall during the .com boom, reading one day that Cisco's market cap was more than GE. I sold most of my Cisco the next day... :-) Time to sell Tesla short... :-)

Noel

Elon Musk's net worth has climbed by $1 billion in the last few weeks ... on the backs of TSLA short-sellers. Join the crowd.

The stock market is in another bubble blown by the Fed. Just wait, it will crash once again. I don't think Elon wants to deal with the headaches of yet another IPO this year. And SpaceX doesn't really need the cash or the distraction of an IPO on the employees and their work. I've been at companies which IPO and all the employees want to do is talk about how much the shares are going to be worth, all the while avoiding doing any hard work. An IPO is a productivity killer. Even after the IPO is done. They don't need that distraction now.

[peter-b]

Tesla is off-topic for these forums!