Inside SpaceX's record IPO and Elon Musk's trillions

[00:00:01]It was the with the largest IPO that ever.

[00:00:05]Uh and let me tell you if people had told me this was the going to happen, I was like, "Man, you must be smoking some really good crack."

[00:00:15]>> SpaceX CEO Elon Musk, the world's first trillionaire, uh speaking uh on what is in the historic day when it comes to initial public offerings. SpaceX opening trading today with their IPO. And joining us live now to uh talk about this. We are uh joined now via Zoom uh by Dr. Jay Ritter, who is the director of the IPO initiative at University of Florida's Warrington College of Business and an IPO expert. Joining us live. Dr. Ritter, thanks for taking the time and joining us today.

[00:00:53]>> Good afternoon.

[00:00:54]>> Uh so first I want to get your initial thoughts and reaction to what we have seen so far uh just in the past couple of hours since trading opened uh at noon for uh shares for for SpaceX.

[00:01:09]>> Well, the the stock price had a fairly tepid opening up 11% but has gone up since then.

[00:01:17]Uh it's it's up about $30 from the offer price. And given the number of shares sold, uh the first day paper profits for those who got shares at the offer price have amounted to $20 billion.

[00:01:35]Uh this is more than twice as much in terms of first day profits of any IPO in US history. Uh the previous record holder was Alibaba in 2014.

[00:01:51]>> Oh, what what do you make of this? Does this surprise you?

[00:01:55]What do you make of the the uh, the price increase in the, in the time from trading open to, to what we're seeing?

[00:02:01]Is that, was that expected? Was it less than expected? Was it higher than expected? What do you make of that?

[00:02:07]>> Uh, the opening was a little bit less than expected. Uh, now with, uh, the increase during the day, uh, brings it up to about what was expected. But, there was a lot of uncertainty. And there continues to be a lot of uncertainty.

[00:02:24]Uh, one thing that seemed to have changed in the last couple of days is there had been talk for quite a while about 30% of the shares going to retail investors.

[00:02:35]And, in recent days, there's been reports that that was cut back to just 20%.

[00:02:42]Um, I know a number of people that have Robinhood accounts who asked for shares, and they were given one share.

[00:02:52]Uh, so, while, uh, many retail and investors asked for shares, uh, many are getting them, but, uh, most of them are are getting, uh, a tiny fraction for what they had asked for. I I've got another friend who has an account at Fidelity. Uh, he got 3% as many shares as he asked for.

[00:03:15]>> What does this mean for SpaceX the company? What does this mean for employees of SpaceX?

[00:03:23]>> Well, the, uh, IPO, uh, is a liquidity event.

[00:03:29]Uh, with SpaceX employees, uh, many of them, um, almost all of them have been getting equity-linked compensation. That is, in addition to their cash salary, they've been getting stock options or stock in the company.

[00:03:44]And, uh, the, the, this is true not only for top executives, but for many, uh, rank-and-file employees, including blue-collar employees. and a lot of them are now able to convert their paper wealth if they want to sell some or all of the shares and put down a down payment on a house or buy the house outright.

[00:04:08]>> Well Dr. Ritter where do you think things go from here?

[00:04:15]>> I am highly confident that the stock price is going to go up or down but a lot >> [laughter] >> and it will go up and down by a lot in both directions. This is going to be a highly volatile stock not only today and tomorrow but for quite a few years as people figure out you know are things going according to plan and the company is going to be enormously profitable or are some things going to wind up as disappointments.

[00:04:47]>> And so people watching this just the average just the average person average investor watching this what what should they keep in mind as as we see all this?

[00:04:59]>> Well this is an exciting company but nobody including the company management knows how the future is going to unfold.

[00:05:10]As I mentioned there going to be ups and downs in the stock price. This is a great company but the value is so high that a lot of things have to go right to be able to sustain a valuation of over two trillion dollars.

[00:05:27]>> Well Dr. Jay Ritter director of the IPO initiative at UF's Warrington College of Business we appreciate you joining us here on Florida Live today.

[00:05:36]>> My pleasure.