What's the optimal timing for a SpaceX IPO?

[Downix]

Btw, Elon Musk's other company Tesla Motors has scheduled its IPO for June 29 (filing was in January), hoping to raise up to $178M:

http://online.wsj.com/article/SB10001424052748704009804575309142582894892.html?mod=googlenews_wsj
http://www.wired.com/autopia/2010/06/tesla-ipo-june-29/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+wired/index+(Wired:+Index+3+(Top+Stories+2))

Tesla's IPO is set for tomorrow (Tuesday, June 29):

http://money.cnn.com/2010/06/28/technology/tesla_ipo/
http://www.reuters.com/article/idUSTRE65R2B620100629

Apparently pricing is $17 a share, up from the previously planned $14-$16.

Does anybody recall how many shares of Tesla Elon Musk has? I think I remember seeing a figure someplace.

http://www.google.com/finance?q=NASDAQ:TSLA
http://www.marketwatch.com/story/tesla-motors-ipo-opens-12-above-offer-price-2010-06-29?reflink=MW_news_stmp

Opened at $19/share, now at a little over $18.

Damn, was that today?!?  I swore it was tomorrow.

[Robotbeat]

Good for them. Elon can now pay rent!

[neilh]

Btw, Elon Musk's other company Tesla Motors has scheduled its IPO for June 29 (filing was in January), hoping to raise up to $178M:

http://online.wsj.com/article/SB10001424052748704009804575309142582894892.html?mod=googlenews_wsj
http://www.wired.com/autopia/2010/06/tesla-ipo-june-29/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+wired/index+(Wired:+Index+3+(Top+Stories+2))

Tesla's IPO is set for tomorrow (Tuesday, June 29):

http://money.cnn.com/2010/06/28/technology/tesla_ipo/
http://www.reuters.com/article/idUSTRE65R2B620100629

Apparently pricing is $17 a share, up from the previously planned $14-$16.

Does anybody recall how many shares of Tesla Elon Musk has? I think I remember seeing a figure someplace.

http://www.google.com/finance?q=NASDAQ:TSLA
http://www.marketwatch.com/story/tesla-motors-ipo-opens-12-above-offer-price-2010-06-29?reflink=MW_news_stmp

Opened at $19/share, now at a little over $18.

It's up to $22 now, on a day which has overall been a 2-3% decrease for Dow and Nasdaq.

http://www.marketwatch.com/story/tesla-motors-ipo-unites-believers-gamblers-2010-06-29

[neilh]

Good for them. Elon can now pay rent!

I wonder if SpaceX employees had the option to get any sort of friends-and-family deal on the Tesla IPO. (as an aside, back when I was in high school I managed to get in on the VA Linux IPO on a friends-and-family for some open source programming work I'd done, which ended up setting a record for first-day gains at 700%

[mlorrey]

TSLA has now hit 24.20 in after hours trading, up 41.8% since opening....

No earnings report, either...

Wow, the CFO makes nearly twice as much salary as Elon...

Evidently the hype of this IPO is global:
http://blogs.marketwatch.com/marketjunkie/2010/06/29/tesla-motors-ipo-revved-up-interest-from-middle-east/

So, simon, you want to debate whether market hype has an impact on IPO prices?

[Jim]

TSLA has now hit 24.20 in after hours trading, up 41.8% since opening....

No earnings report, either...

Wow, the CFO makes nearly twice as much salary as Elon...

Evidently the hype of this IPO is global:
http://blogs.marketwatch.com/marketjunkie/2010/06/29/tesla-motors-ipo-revved-up-interest-from-middle-east/

So, simon, you want to debate whether market hype has an impact on IPO prices?

This is a global product.  Not a niche market like space launch. 

Simon is closer to the truth than you are wrt Spacex

[mlorrey]

"Tesla, the first American car maker to go public in half a century, priced the deal one dollar above the initial offer price of $14 to $16 a share.

The maker of the Roadster sports car raised $202 million from the sale of 11.88 million shares. Insiders, including 38-year-old Chief Executive Elon Musk, collectively sold an additional 1.4 million shares in the deal.

Musk reaped an IPO payday of $15.3 million based on the 900,212 shares he sold, according to a regulatory filing.

Tesla on Monday boosted the share offering by 20% to 13.3 million shares due to strong demand. The company's selling shareholders granted the deal underwriters a 30-day option to buy an additional 1.995 million common shares to cover any overallotments. In all, the IPO could be worth $260 million. "

http://www.marketwatch.com/story/tesla-motors-ipo-opens-12-above-offer-price-2010-06-29

Yeah, looks like Elon can pay his divorce lawyer now, and treat whoever his new girlfriend is.

[mlorrey]

TSLA has now hit 24.20 in after hours trading, up 41.8% since opening....

No earnings report, either...

Wow, the CFO makes nearly twice as much salary as Elon...

Evidently the hype of this IPO is global:
http://blogs.marketwatch.com/marketjunkie/2010/06/29/tesla-motors-ipo-revved-up-interest-from-middle-east/

So, simon, you want to debate whether market hype has an impact on IPO prices?

This is a global product.  Not a niche market like space launch. 

Simon is closer to the truth than you are wrt Spacex

We'll see. Simon was wrong on this IPO, and SpaceX has similar global exposure and appeal. The point of SpaceX is to turn space launch from a niche market into a global one.

[Jim]

We'll see. Simon was wrong on this IPO, and SpaceX has similar global exposure and appeal. The point of SpaceX is to turn space launch from a niche market into a global one.

It hasn't had the global exposure and appeal.  It is just a curiosity.  Most of the country much less the world knows about spacex.

[nooneofconsequence]

IPO's partially work by establishing a set of "comparable's".

With Tesla, we've had many.

Name me all the ones for Space-X. Next, try to establish guidance for earnings expectation for the next 2-3 years based on that. Ouch.

It makes sense the Tesla IPO in comparison. However, a Space-X IPO will be a very different arrangement. I can't imagine any institutional participation, so it would likely be a lot smaller ... in an industry/activity much more capital intensive ... much more riskier ... with long standing well financed rivals ... at a time of great uncertainty ... I could go on like this still longer.

Yes, such an IPO *right now* would be like selling "diamond studded dog collars".

If I wanted to IPO ... I'd wait till (assuming a hell of a lot btw) I'd gotten a virtual lock on the COTS business, had a high confidence of analysts on a secondary revenue stream (perhaps Iridium replacement sats in launch integration) ... and could point to other related successes with unconventional IPOs. Then talk about game changing whole industries, in this overwhelming "big picture" way. Would attract the long odds gamblers wishing to exchange out the "take a chance" part of the portfolio under the rubrik of a marketing expense write down on the downside risk.

We're not in that territory for more than a year. But this is the kind of story you'd start talking to the street about pretty soon to start people clearing out a position to accept such.

[jimgagnon]

NOofC is correct, there are no publicly held launch companies in the world today. However, there are several public satellite communications companies; one might find some guidance from their IPO experience to help gauge when SpaceX should go public.

The "ideal" IPO is what the bankers call a 40/40: a private company that shows an annual growth of 40% and 40% rate of return for three years. Few companies hit that mark; figures in the 20-30% range for both are more typical. Should SpaceX continue to execute as it has, complete all of its COTS obligations, service Iridium and provide manned services to LEO, it has a good chance of being considered ideal.

Also, a publicly held American launch company has a certain patriotic tinge to it. Same kind of effect that got people to buy into the Tesla IPO.

Musk has stated that he wants to take SpaceX public after the second successful Falcon 9 launch, so I'm not sure how much he's listening to the standard wisdom on IPOs. However, Tesla by all measures seems to be a successful public offering, and it has only one model catering to a niche market, so perhaps Musk is correct that the normal rules don't apply here.

[neilh]

NOofC is correct, there are no publicly held launch companies in the world today.

?

http://www.google.com/finance?q=NYSE:ORB
http://www.google.com/finance?q=NYSE:BA
http://www.google.com/finance?q=NYSE:LMT
http://www.google.com/finance?q=EPA:EAD

[simonth]

TSLA has now hit 24.20 in after hours trading, up 41.8% since opening....

No earnings report, either...

Wow, the CFO makes nearly twice as much salary as Elon...

Evidently the hype of this IPO is global:
http://blogs.marketwatch.com/marketjunkie/2010/06/29/tesla-motors-ipo-revved-up-interest-from-middle-east/

So, simon, you want to debate whether market hype has an impact on IPO prices?

This is a global product.  Not a niche market like space launch. 

Simon is closer to the truth than you are wrt Spacex

We'll see. Simon was wrong on this IPO, and SpaceX has similar global exposure and appeal. The point of SpaceX is to turn space launch from a niche market into a global one.

Where was I wrong "on this IPO"? I said
"I hope for them they can actually get their order book full. It's only a small size of shares offered, but at quite a high valuation. All the best to Tesla, if Model S works out as planned, they might make it big in one of the largest future industries out there."

How was I wrong on Tesla's IPO? This was a small-scale IPO, just as I said, 200 million. It's not like we are talking about a 2 billion Blackrock IPO here. And what does that have to do with SpaceX? Tesla is in a completely different field, it has no relation at all to this topic, the thread has now at least 10-15 posts which have no bearing at all to a potential SpaceX IPO. Should we start to discuss the evaluations of the next Chinese bank going public here too? Or what about the next IPO of a biotech start-up?

Here are the facts:
Global future potential EV market: 1 trillion dollars or a lot more per year.
Global future potential space launch market: 2-3 billion dollars per year and stagnating.

Do you see the difference? I guess not...

[jimgagnon]

NOofC is correct, there are no publicly held launch companies in the world today.

?

http://www.google.com/finance?q=NYSE:ORB
http://www.google.com/finance?q=NYSE:BA
http://www.google.com/finance?q=NYSE:LMT
http://www.google.com/finance?q=EPA:EAD

You're correct about Orbital. We can debate how appropriate it is, but I forgot all about them.

I guess you mention Boeing and Lockheed Martin because of ULA. However, ULA is a joint venture and is not publicly traded, so it's very hard to use it at a comparable.

Didn't even know who Astrium was. It's a wholly owned subsidiary of EADS, a European defense contractor and one of the partners behind the privately held Arianespace. Astrium resells Arianespace's services, while adding it's own value. Again, as EADS (like BM and LMT) is a huge corporation, it makes comparisons for an investor very difficult.

None of these are really in the same position as SpaceX. Here's a brief list of public companies with the highest gross margins; however, none of them launch.

[yg1968]

Here are the financial statements of Tesla Motors (for those of you that are tracking Elon Musk's finances):

http://www.sec.gov/Archives/edgar/data/1318605/000119312510017054/ds1.htm#toc51863_25

[blairf]

Elon has ~25 mill shares in Tesla plus a whole stack of options

So as of now that is about $500 million in Tesla stock

He can't sell for a couple of years, but if he wanted he could use as collateral.

On topic, didn't Elon say he was looking for a strategic investor rather than an IPO for SpaceX. Which sort of makes sense if he wants to keep close control. I suspect that he could tap up any number of West Coast digerati for up to $1Bn if required.

[mlorrey]

NOofC is correct, there are no publicly held launch companies in the world today.

?

http://www.google.com/finance?q=NYSE:ORB
http://www.google.com/finance?q=NYSE:BA
http://www.google.com/finance?q=NYSE:LMT
http://www.google.com/finance?q=EPA:EAD

Thank you, Neil. Don't forget ATK as well.

[mlorrey]

Elon has ~25 mill shares in Tesla plus a whole stack of options

So as of now that is about $500 million in Tesla stock

He can't sell for a couple of years, but if he wanted he could use as collateral.

On topic, didn't Elon say he was looking for a strategic investor rather than an IPO for SpaceX. Which sort of makes sense if he wants to keep close control. I suspect that he could tap up any number of West Coast digerati for up to $1Bn if required.

Yes, though he was allowed to sell 900,000 shares of his own in this IPO, which netted him a bit over $15 million.

I havent heard of him looking for a strategic partner, though it is a tradeoff which is more desirable. Public trading allows public goodwill to amplify a stocks price, but also to make it more volatile. A private equity partner makes for stability in value but also a severe lack of liquidity in equity which can hurt you (as we see in the SeaLaunch situation) if more traditional sources of capital see your venture as too risky.

SpaceX has the advantage of being seen as a populist underdog in an industry long dominated by corporate elites and entrenched government contractor interests. Despite what Jim says, SpaceX has tremendous popular appeal (the 20,000 people trying to get into the official launch chatroom is evidence enough). Its CEO is widely seen as a rain maker who turns to gold everything he touches. That in and of itself is tremendously valuable and is something that no other launch company posesses.

[RedLineTrain]

This was a small-scale IPO, just as I said, 200 million. It's not like we are talking about a 2 billion Blackrock IPO here. And what does that have to do with SpaceX? Tesla is in a completely different field, it has no relation at all to this topic, the thread has now at least 10-15 posts which have no bearing at all to a potential SpaceX IPO. Should we start to discuss the evaluations of the next Chinese bank going public here too? Or what about the next IPO of a biotech start-up?

Here are the facts:
Global future potential EV market: 1 trillion dollars or a lot more per year.
Global future potential space launch market: 2-3 billion dollars per year and stagnating.

Do you see the difference? I guess not...

1) You don't know what the future potential space launch market will be.  You just don't.  Nobody does.

2) The Tesla IPO is relevant to SpaceX because it puts money in Musk's pocket and adds to his credibility in the venture investor community regarding scaling the finances of a capital-intensive business.  This is a successful liquidity event for all of the venture investors and a good piece of business for the investment banks.  They will want to go to this well again.

That said, I agree with you that these are separate industries with different profiles.  The auto industry is high profile and Tesla has a sexy high-profile car.  Tesla benefited from that in this IPO.  The launch industry on a day-to-day basis is not high profile, but at times has significant high-profile events.  For instance, Fox News may cut away to a launch.  If we start talking seriously about heavy lift and Mars, then launch could have a very high profile.

Also, SpaceX will not be within the investing criteria of green funds and green investors, while Tesla is one of the only places where green funds and investors can put their money.

On the other hand, SpaceX has much less competition for its market than does Tesla.

[RocketEconomist327]

We do not want an IPO with SpaceX.

I may be the biggest capitalist here; but when it comes to SpaceX, I want a benevolent dictator who can "close control" the business.  I could care less about Tesla and his other companies.

You do not want market pressures effecting the decision making process.  I will disagree with Jim and say business is business.  Some business' can suffer a failure and survive while others cannot.  You do not want the bottom line driving SpaceX.

SpaceX is relatively "flat".  Not a lot of fat there (at least right now).

SpaceX has a kick ass CEO/CTO who doesn't need oversight to make the company grow.  Elon has demonstrated he knows how to run a company.

SpaceX is doing just fine without public share holders.  Once you go public it opens up all sorts of worms.  Moreover, the SEC will regulate the hell out of how SpaceX runs it's business.

I am very much AGAINST an IPO for SpaceX.

IMHO

VR
RE327