Such is the belief in and pulling power of the ex-Pretoria Boys High wunderkind and world’s richest individual, Elon Musk, that if he were to launch a washing powder, millions would buy it on the expectation that it would remove stains, iron out creases and come with an app that would tell you (or your house robot) the optimum time and weather conditions to hang up your clothing.

To place Musk’s almost US$1 trillion wealth in perspective, it is greater than all other countries apart from the top 20. With a track record of invention and innovation possibly only matched by Steve Jobs and Bill Gates, Musk has a formidable history of product development and commercial success. While his most high-profile companies are undoubtedly Tesla, X (formerly Twitter) and SpaceX, it is sometimes overlooked that he was also a co-founder of PayPal and OpenAI.

But the most financially sensational of all Musk’s adventures is the Initial Public Offering (IPO) of Space Exploration Technologies Corporation (SpaceX), founded by Musk in 2002. The June 12 IPO broke all previous records, selling 550 million shares at a listing price of US$135, thus raising US$75 billion and valuing the company at US$1,77 trillion. The size of the company meant that it was fast-tracked onto the NASDAQ, touching US$225 a share at one point and equating to a market capitalisation in excess of US$2 trillion. At the time of writing, the share price has stabilised around US$139, close it its listing price of US$135, but is not yet listed on the S&P 500.

But while the sheer size and scale of the IPO is breathtaking, questions abound regarding how to value the company, whether it is investable and at what price. By virtue of its size on the NASDAQ, some invested in Exchange Traded Funds (ETFs) have, de facto, a limited exposure SpaceX. But for active fund managers and individual investors the question remains moot, (assuming you did not benefit from pre-listing institutional private placement).

One of the challenges facing would be investors is trying to make sense of what SpaceX really is, given its multidivisional complexity combining the rocket and satellite business with xAI’s artificial intelligence ventures, together with the social media platform X. Notably, xAI also collaborates closely with Tesla and there is some speculation that the electric car manufacturer could be folded into the SpaceX family. Even SpaceX’s listing documents fail to provide the clarity one might expect, given the satellite and Starlink businesses are profitable, unlike the loss-making xAI. Indeed, in the case of SpaceX, traditional price earnings valuation methods and metrics don’t work given the heavy cash burn of xAI.

This has led to a massive disparity in valuation, ranging from Daiwa’s $2.4 trillion target, to Morningstar’s $780 billion fair-value estimate. On the one hand, well-known economist, Robert Reich, has warned that the SpaceX IPO could be the universe’s largest Ponzi scheme. Others view SpaceX as a significant investment opportunity due its multi-industry dominance spanning aerospace, global telecommunications via Starlink, and artificial intelligence infrastructure following its merger with xAI.

Whatever the case, fund managers, investors and indeed the world more widely will be watching closely how this ‘Pretoria boyjtie’ navigates his biggest challenges and opportunities in the coming months and years.

Sincerely,