It’s SpaceX IPO Day!

**Travis Hoium** (0:02)
It's SpaceX IPO Day, and Motley Fool Hidden Gems Investing starts now.
Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoium, joined today by Lou Whiteman and Jon Quast. And we have to start with the news of the day. That is the SpaceX IPO. This has been coming for a while. It's been a huge topic. Retail investors, who are the people that we talk to, are gonna be a huge, huge piece of this. So I wanna go through kind of an overview and get all the way down to when are some of these big owners going to sell? But Lou, let's start here for investors who are maybe new to this IPO process, who've never bought an IPO or a stock that has started their initial trading, like SpaceX is going to do today. What is an IPO and why is it important?

**Lou Whiteman** (0:48)
So an IPO, Initial Public Offering, is the process through which a private company becomes a publicly traded company. All companies have shares, private or public. But before the IPO, SpaceX shares were held by investors who had invested early on, venture capitalists, insiders, not easily traded on the open market. So what SpaceX is doing is they're selling a small sliver of themselves, some percentage of their shares, in this case, I think what, under 10%.
Over time, all of the shares will become tradable. This allows both retail investors like us, non-venture capitalists to get in. It also allows for big holders to get out. So it is just the process of becoming more easily tradable, or as we call it, public.

**Travis Hoium** (1:36)
We'll get to that selling piece in just a moment. But Jon, why is this IPO in particular such a big deal?

**Jon Quast** (1:43)
Because it's the biggest IPO of all time, and it's not even close. So 2019, Saudi Aramco went public in its IPO. It raised about 25 billion. SpaceX is looking to raise 75 billion. So three times the size of the last biggest IPO. So this is absolutely enormous. And when you think about the timing here, I know we're going to get into this more. But when you look at Anthropic, OpenAI also looking to go public in the near future. You look at even a company, we shouldn't forget about SK Hynex from South Korea, looking to go public here in the US. It's already publicly traded in Korea, but publicly traded here in the US at maybe a trillion-dollar valuation as well. So we have a cluster of four potentially trillion-dollar companies going public at the same time, maybe 200, 250 billion raised in IPO proceeds all at once.
I don't know, we haven't seen that before.

**Travis Hoium** (2:41)
Lou, this does seem like a unique moment. And we had a little bit of this during the pandemic. There was a lot of those SPACs, SPACmania.
That was very different companies that it seems like we have today. SpaceX is a very real company doing very real things. We've done shows, if you want some deep dives, we have some of those in the back catalog for Motley Fool Hidden Gems Investing. And you're going to be doing some content on the Motley Fool today and over the next few weeks or so about this. But this is a moment where you're going to see potentially three trillion dollar companies coming to public markets in 2026 The scale of that is just something we've never seen.

**Lou Whiteman** (3:23)
Yeah, this is not what the IPO market was made for, for honest. And some of these things were all this talk about, well, they're bending these rules, they're changing these rules. I'm sympathetic to that. But also the rules never envision companies this size. It's important to say, yes, a lot of money is coming on as a lot of questions. And I don't think any of us really know the answer to what this will do for the market because it should pull money away from elsewhere. By the St. Louis Fed, there is $8 trillion on the sidelines, as they call it. That's money in money markets. Not all of that is looking to get in, but there is a buffer there.
I'm trying to do the back of the envelope. If all three go public, what we're thinking, maybe 5% to 6% of total market capitalization of the US markets. So that's a huge number, but it's not a relatively massive number. I think over time, the market can handle this, but I do think that, yeah, we could be in, even if you have no desire to get in on this offering and just want to watch it from the sidelines, between your index funds and just what it does, the pulls on other stocks, almost everybody invested in US markets is going to feel this somehow, at least in the short term.