SpaceX IPO: What It Means for Investors & the Secondary Market

The potential 2026 IPO of SpaceX is generating significant buzz, signaling a possible thaw in the previously frozen public markets. After a prolonged period of IPO drought, the prospect of a company like SpaceX going public is not only exciting for investors but also has profound implications for the burgeoning secondary market where pre-IPO shares are actively traded. This article delves into the details of SpaceX’s IPO plans, the mechanics of private liquidity, and what investors are looking for in today’s pre-IPO giants. We’ll explore the current landscape with insights from Greg Martin, Managing Director at Rainmaker Securities, a leading broker-dealer specializing in secondary share transactions.

Understanding the Current Landscape of Pre-IPO Companies

Greg Martin, founder of Rainmaker Securities and Archer Capital Group, and co-founder of Liquid Stock, highlights a key shift in the market. “Private companies are staying private much longer now,” he explains. “Many businesses – including SpaceX and others that would rank among the top 30 in the S&P 500 – would historically have gone public years ago.” This extended private phase is driven by two primary forces: the desire of investors to access high-growth companies and the need for early shareholders and employees to realize liquidity from their substantial holdings.

This dynamic has fueled the growth of the secondary market, offering a pathway for liquidity before a traditional IPO. The increasing market capitalization held within private markets further amplifies this trend. “We only see this trend growing because more market cap is now housed in the private markets,” Martin states.

Will a Break in IPOs Impact Secondary Markets?

The question arises: how will the secondary market react if IPO activity picks up? Martin believes a SpaceX IPO won’t diminish the secondary market’s importance. “While SpaceX is a one-of-a-kind company, there are a lot of companies that are being started today and that are growing very fast. Three or four years ago, what were OpenAI and Anthropic valued at? Those are now over a trillion dollars of combined market cap.”

He anticipates the trend of private secondary opportunities will continue to expand, and a successful SpaceX IPO could actually increase capital market interest in private companies. “I really see the opportunity in the private secondary spaces as growing overall, and frankly, when we see the matriculation of SpaceX to the public markets, I think it’s going to actually increase the capital market interest in private companies.”

What’s the Buzz Around the SpaceX IPO?

The IPO market has been sluggish since 2021, making SpaceX a potential “bellwether” company. “SpaceX is clearly a bellwether company…and there’s a huge amount of interest in that company,” Martin notes. Recent tender offers valuing SpaceX at $800 billion have generated significant demand on Rainmaker’s platform, and interest extends to other potential IPO candidates like ByteDance, Stripe, Databricks, OpenAI, and Anthropic.

“SpaceX, I think, is the one that people are following the most closely. And I really think it could create a reset in the IPO market if it were to go public this year.”

Bid Movement and Price Discovery

SpaceX has consistently defied market downturns. “Even during the down periods of ‘22 and ‘23, SpaceX was the one company that continued to price up every time there was a hint of the company going public,” Martin observes. Currently, there’s a significant increase in both the volume and price of bids on Rainmaker’s platform, already exceeding the valuation of the last tender round and approaching the potential $1.5 trillion IPO price.

Why is Elon Musk Considering an IPO Now?

Elon Musk’s previous stance against taking SpaceX public until regular rocket flights to Mars were established has seemingly shifted. Martin suggests several factors are at play. “We are in a very good market, we’re at all time highs across the board. SpaceX has seen a large amount of interest in the private markets, but the private markets are constrained. Not every investor on the planet can access the private markets.”

SpaceX’s dominant position in the rocket-launching business, the growth of Starlink, and the potential of Starship – including applications like bulk payload delivery, global logistics, and even space-based data centers – all contribute to its attractiveness. “And so it just makes sense, given the positive market dynamics and massive potential opportunity that SpaceX could address across its many business lines. Why not go and unlock all the rest of the capital markets to help them fund their businesses?”

National Security Concerns and Public Markets

SpaceX has historically maintained tight control over its cap table due to national security concerns, limiting access to potential U.S. adversaries. The question is whether opening up to public markets will compromise this security. Martin believes a limited initial offering – “a sliver deal, so only 5% of their company” – could mitigate this risk.

“At least things will be out in the open and publicly disclosed, so they can see who owns their shares. The question will then become, do any of these companies – even if they’re in adversarial countries – have any real control? If they’re just economic interests, that’s something that can be tolerated. The reality is, Elon and a pretty tight knit group of people will still continue to control the company.”

The Competitive Landscape: SpaceX vs. the Rivals

The timing of the potential SpaceX IPO coincides with similar ambitions from competitors like Sam Altman (OpenAI) and Jeff Bezos. “SpaceX’s success is going to breed some imitation,” Martin acknowledges. “We’ve heard now that Bezos is going to launch a communication network to compete with Starlink, but they’re a long way behind.”

He emphasizes the different capital needs of these companies. OpenAI, with its high burn rate, requires access to a broader investor base, making a public offering logical. SpaceX, with a largely profitable business and market dominance, has more flexibility. “I think SpaceX can be a little more measured. They can find the right time when the market presents itself well, because they have a business that is largely profitable, and they have dominance in their two key businesses. So they’re in the driver’s seat.”

The “Elon Halo Effect” and IPO Pricing

While SpaceX faces challenges, such as Starship V3 launch issues, Martin believes the “Elon halo effect” will likely result in a premium valuation. “It will definitely get a premium multiple. There’s an Elon halo effect, and he’s delivered.” He points to Tesla’s vertically integrated model and innovative ventures like self-driving taxis and Optimus robots as examples of Elon Musk’s ability to execute ambitious projects.

“I do think there’s a halo effect around Elon and that creates some pressure, too. So I expect he will get a premium well and above what typical market rates would be for a company like SpaceX, given their balance sheet and revenue. I think people believe in the future of a data center in space that’s cooled by space and run by solar panels directly from the sun. I mean, it sounds crazy and pie in the sky, just like going to Mars sounds crazy and pie in the sky. But if anyone can do it, Elon’s probably the guy.”

However, Martin also cautions that the reliance on a single individual’s vision carries risk. “When you put so much value in the belief that one person can exceed expectations continuously, that’s a big challenge. And some people will not be comfortable with that risk.”

Signals to Watch for an IPO

Martin outlines key indicators that a company is preparing for an IPO, beyond simply announcing intentions. These include hiring senior executives with public company experience (e.g., a Chief Accounting Officer), strengthening investor relations, legal, and accounting teams. “Companies like SpaceX have had public grade teams for a while, so I don’t think there’s a lot to learn there.”

Private vs. Public Market Valuations

Effective price discovery is crucial for a successful IPO. “It’s a good sign for private companies to pre-understand their demand,” Martin explains. He advocates for utilizing secondary markets to gauge investor interest and refine valuations before going public. “We’re really pushing companies to actually open up your private secondary capability because it’s a great way to develop price discovery well in advance of the IPO, to start getting people attached to your business, to open yourself up to a broader investor base.”

How Secondaries Work: Options for SpaceX Employees

For a SpaceX employee with stock options, several avenues exist for realizing liquidity before an IPO. SpaceX frequently conducts tender offers, providing a direct opportunity to sell shares. Additionally, Special Purpose Vehicles (SPVs) allow employees to trade the economic benefits of their shares without directly altering the cap table. “That’s where most of the trading in SpaceX lies.”

Rainmaker Securities facilitates these transactions, navigating the complexities of private company cap tables and regulatory requirements.

Information Access in the Secondary Market

Access to information is a significant challenge for investors in the secondary market. Rainmaker Securities works to bridge this gap by providing data rooms and conducting independent research. “We work with some companies where we’re provided data rooms and can provide access to information. We do our own research on anything publicly available and have a view of supply and demand dynamics.”

What Investors Seek in Pre-IPO Shares

Sophisticated investors prioritize thorough due diligence, examining financials, management teams, cap table structures, and supply-and-demand dynamics. “Just like a traditional investor, they would want to be able to do their due diligence across financials, across management.”

Demand for Late-Stage Unicorns

Demand remains strong for shares in companies like Databricks, Stripe, OpenAI, Anthropic, xAI, and ByteDance. Martin notes that interest spikes when companies signal their intention to go public, as seen with Discord, Motive, and Canva. “As companies signal they’re going to go public – like Discord, Motive, Canva – people get a feeling that there’s going to be liquidity, and that’s when we start to see things open.”

Rainmaker Securities experienced a record year in 2023, trading over $1 billion worth of secondaries.

Connect with Greg Martin

You can connect with Greg Martin on LinkedIn. Visit Rainmaker Securities for information on selling shares, Archer Capital Group, and Liquid Stock for option exercise solutions.