How Wall Street pulled off the biggest IPO in history for SpaceX

Until well after midnight on Wednesday, bankers huddled in a room on the 41st floor of Goldman Sachs’ New York office portioning out the most sought-after initial public offering in history.

With Elon Musk looming over proceedings by video, SpaceX president Gwynne Shotwell and chief financial officer Bret Johnsen combed through orders at the top of the book, reallocating oversubscribed shares among Middle Eastern sovereign wealth funds and the biggest US institutions.

More than 20 investors received billion-dollar-plus chunks of the deal, 10 times the previous record for any IPO, people familiar with the matter told the FT.

Earlier in the day, investors had cycled through Goldman’s office petitioning for a share of a deal they knew was likely to pop when it started trading on Friday, netting anchor investors tens of millions in instant profit.

As they made their case, they munched on pastries from French chef Dominique Ansel, including custom SpaceX-branded versions of his famous “Cronut”, a croissant-doughnut hybrid.

That day capped a gruelling six-month process that has seen bankers from Goldman led by Kim Posnett and Dan Dees and Morgan Stanley’s Kate Claassen and Colin Stewart decamp to SpaceX’s offices in Hawthorne, near Los Angeles, staying in hotel rooms and renting Airbnbs.

They worked side by side with SpaceX staff on a vast open floor, not far from where the group builds its Falcon rocket and Dragon spacecraft.

Drafts of the prospectus were sent up to senior SpaceX executives, including vice-president of finance Majla Custo, who weighed in before Musk’s final sign-off.

Together they plotted how to pull off the largest IPO in history, which required investors to believe in a sci-fi strategy, overlook steep losses, stomach an unprecedented valuation and hand total control to a controversial and mercurial founder.

Bankers led tours of its vast launch site in Texas to see its skyscraper-sized reusable Starship rocket.

A 200,000-word prospectus laid out the vision: Martian colonies, electromagnetic lunar catapults, asteroid mining and orbital AI data centres.

They commissioned glossy promotional videos and wrapped them together in a website to whip up retail demand from Musk’s army of online fans.

By Friday’s open it was clear they had succeeded.

SpaceX raised $75bn and secured a valuation in excess of $2tn.

Now the syndicate stands to collect $500mn, the highest fee ever paid on a public offering.

This is the story of how they did it, based on interviews with multiple advisers on the deal.

“There’s no better builder than Elon and SpaceX,” said one banker involved.

“There’s no other company that can turn fiction into fact.”

The roadshow officially kicked off on June 4.

Musk, always his companies’ biggest cheerleader, peppered his 240mn followers on social media platform X with SpaceX content.

The entrepreneur joined a marquee launch event at JPMorgan’s headquarters by video for a discussion with Jamie Dimon.

More than 300 investors packed into a hall on the 51st floor of its 270 Park Avenue headquarters, streaming the event to branches nationwide and on social media.

Rockets blasted off with sound effects by the elevators, moon rocks sat in one corner, and analysts in white SpaceX jumpsuits showed investors to their seats.

George Lucas sent along books filled with Star Wars art.

“This is more like Woodstock than an IPO,” said attendee Dylan Hixon of Arden Road Investments. “We chatted about mining on the moon.”

On stage, Dimon, who has had a rocky relationship with Musk in the past, praised him as the “Edison of our time” and let the SpaceX chief lay out the case for backing the rocket maker.

Musk described the “self-growing city on the Moon” he hoped to build, while calling Mars, which has almost no atmosphere, a “fixer-upper of a planet” with “a lot of potential”.

Bankers and SpaceX executives next flew to Boston to meet large US mutual funds such as Fidelity and Wellington before jetting across the country for more investor meetings at SpaceX’s Hawthorne offices on Monday.

As Musk and his bankers combed through the order book on Wednesday night, they assessed who would be committed long-term owners and weeded out those most likely to dump the stock for a quick profit.

They handed about 70 per cent of the offering to long-only managers, sovereign wealth funds and longtime Musk friends, with retail handed a further 20 per cent of the pie. Hedge funds were squeezed down to about 10 per cent of the book.

The chief investment officer of a small US hedge fund said SpaceX’s bankers had taken the unusual step of asking for proof that his fund had enough cash for the tens of millions of dollars of stock it had requested.

“The banks are saying ‘no, we want to see the cash in your account first’. I’ve done dozens of IPOs and I’ve never been asked that before,” the CIO said.

The fund was eventually allocated about $80mn of shares, having bid for $200mn.

SpaceX’s employees past and present have also been anxiously awaiting the IPO.

The extreme increase in the group’s valuation, up from $400bn just under a year ago, has made thousands of them millionaires overnight.

Former staff kept close track of the company’s prospects in a chat group on WhatsApp called “Stonks”.

Participants have spent much of the IPO process in disbelief at their good fortune, according to one member of the chat.

“The SpaceX mafia is gonna make [the ‘PayPal mafia’ of Musk, Peter Thiel and others] look tiny by comparison,” said David Anderman, an investor who served as SpaceX’s general counsel until 2020.

“There will be a lot of very wealthy millionaires” looking to start their own companies.

The IPO also sparked jubilation in Silicon Valley, where a host of blue-chip venture firms such as Sequoia Capital, Andreessen Horowitz, Founders Fund and 137 Ventures have realised billions of dollars in gains.

“It’s an exciting moment and a culmination of a lot of work by the company,” said Christian Garrett, a partner at 137 Ventures, one of SpaceX’s earliest backers with a 1 per cent stake.

“SpaceX is a great testament to entrepreneurship in America — it was started to bring launch capacity back from Russia and has built from there.”

But the biggest single beneficiary is Antonio Gracias, a Musk loyalist for two decades who amassed close to 7 per cent of SpaceX’s class A shares via his investment firm Valor Equity Partners and 29 affiliated entities. His reward is a stake worth about $81bn.

Goldman and Morgan Stanley were the winners among the 22 banks on the deal.

They each took $100mn from the $500mn fee pool, by far the largest IPO windfall ever, while Bank of America, JPMorgan and Citi each raked in about $75mn.

One banker speculated the $500mn fee was possibly calculated with 0.67 per cent of the float in a reference to the “six-seven” meme popular online, keeping with Musk’s penchant for jokes.

Goldman in particular had been courting Musk and SpaceX for almost two decades, according to people familiar with their strategy.

The bank’s persistence paid off when it trumped longstanding Musk adviser Michael Grimes of Morgan Stanley to win the coveted “lead left” role and the associated bragging rights.

Befitting the largest IPO of all time, the seniority of the bankers personally running aspects of the deal was notable.

Posnett, Goldman’s co-head of investment banking, led the draft of the S-1 prospectus in December, alongside head of equity capital markets David Ludwig, their boss Dan Dees and senior adviser Susie Scher.

They immediately started sounding out large investors at the World Economic Forum in Davos after being challenged by Musk to meet a tight deadline.

The notoriously demanding billionaire insisted on timing the IPO to coincide with a rare planetary conjunction in early June.

The advisers endured numerous distractions and had to redraft the prospectus multiple times. S

paceX completed a $1.25tn merger with his lossmaking start-up xAI in February, it then agreed a $60bn option to buy AI coding start-up Cursor in April and in recent weeks struck two massive deals with AI lab Anthropic and Google to rent out its computing power.

Despite these hurdles, the bankers hit their target, taking SpaceX public the same week that Mercury, Venus and Jupiter aligned in the night sky.

There were other unique aspects.

Unusually for an IPO there was no price or size range to allow flexibility on the day, with Musk deciding that SpaceX would sell 555.6mn shares at $135 each no matter what.

“Elon didn’t want to do a kabuki dance with the pricing. It was not just a finger stuck in the air, he listened to investors and then said: ‘This is my price, if they buy, they buy,’” said one banker on the deal, referring to the highly stylised Japanese dance.

“Take it or leave it: there is one person in the world who could do it like that and it is Elon,” the person added.

His gamble paid off.

The deal was three times subscribed and SpaceX closed the day up 19 per cent, making it the world’s sixth-largest company and Musk the world’s first trillionaire.

“With any IPO you want to leave people wanting more,” said a lead banker on the deal. “That’s the art of the job. That’s how you make sure it opens up.”

Trading kicked off in a carnival-like atmosphere at Morgan Stanley’s offices on Friday afternoon.

Led by Morgan Stanley’s veteran trader John Paci, a one-time backup quarterback for the New York Jets, bankers wore custom green trainers at Musk’s behest, in reference to a “greenshoe” option to raise an additional $11bn.

Goldman’s lead equity trader Benny Adler reflected the bombastic mood by giving a speech to the hundreds who gathered on its trading floor.

“In 1969 we put a man on the moon,” he shouted.

“Now let’s go to Mars!”

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Additional reporting by Amelia Pollard in New York

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