What Tesla’s IPO Can Teach Us About SpaceX

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**Al Root** (0:11)
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**Imani Moise** (0:15)
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Welcome to Tech News Briefing. It's Friday, June 12th. I'm Imani Moise for The Wall Street Journal. Today, we're starting with a bell.
That's the sound of the NASDAQ opening bell one June morning. Nearly 16 years ago, the last time Elon Musk took a company public. On June 29th, 2010, Tesla made its debut in an IPO priced at $17 a share, at a valuation of roughly $1.7 billion. In just a matter of hours, we expect another Musk company, SpaceX, to launch on the NASDAQ at a valuation of $1.77 trillion, about a thousand times Tesla. When Tesla went public, the company hadn't delivered many cars. It had just one model for sale, the Roadster. Its second vehicle, the Model S, was set to begin production in 2012 Tesla had never turned a profit, but was pitching itself as the future of the auto industry nonetheless. Some Wall Street analysts were skeptical about the company's financials, but Musk had an answer for them. Here's what he told Bloomberg at the time.

**Elon Musk** (2:09)
When people see who's investing in an IPO, it's the smartest, most long-term thinking investors in the market. It's really an amazing set of investors. So I think it's just worth noting that the smartest money in the world is betting on Tesla.

**Imani Moise** (2:25)
Today, Tesla is worth well over a trillion dollars, and some consider its IPO to be one of the most successful in modern history. Now, Musk is betting with SpaceX that he can replicate that success with an even bigger company and stratospheric ambitions.

**Elon Musk** (2:42)
Where we're going to develop the technology, necessary to take humanity and civilization and life as we know it, to another planet for the first time in the four and a half billion year history of Earth.

**Imani Moise** (2:55)
So what can Tesla's IPO teach us about what to expect from SpaceX's IPO? And will investors be able to separate the company from the man behind it? To help us unpack those questions, we're joined today by WSJ reporter Becky Peterson, Associate Editor of Barron's Al Root, and WSJ columnist Tim Higgins, who also wrote a book on Tesla and Elon Musk called Power Play. Welcome to the show, everyone.
So Al, Tesla went public over a decade ago. What was the mood like around the company at that time? And what were investors buying into?

**Al Root** (3:29)
I mean, the size was infinitely smaller than SpaceX.
And there was incredible skepticism that you could build a profitable, attractive electric vehicle. You know, you're competing with EV1, Nissan Leafs, things like that. Still wasn't profitable. Battery prices. You need so much scale in automotive businesses. So the size was something that is completely different. Elon's reputation is something completely different. It really was buying into this idea of electric vehicles could work someday. So just a completely different vibe. This is 1.8 trillion. Elon is Elon. This is going to make him a trillionaire.
As a percentage of the market, SpaceX is much larger than Tesla ever was. So it is completely different.

**Imani Moise** (4:17)
Tim, you spent a lot of time covering Elon Musk. What was he like back then?

**Tim Higgins** (4:21)
Well, he had a lot to prove. SpaceX was this radical idea. Tesla was a radical idea.
SolarCity was out there. He was invested in that. He had a little bit of a chip on his shoulder, and he wanted to prove that he could change the world. Tesla, from an investor standpoint, seemed like a rather risky gambit betting on Tesla at that time. But he had the vision. He had this vision for what the car could become, and one of his real superpowers has been to convince customers and investors to go along with him.
They had the Roadster and they were struggling to sell that, but they had the idea of what the Model S was going to become. They needed the money from the IPO to get to that point. The money was super important, but it was going to be many years and many billions of dollars more to get to the point where the company was sustainable. In a lot of ways, it's a similar situation with SpaceX. They need a lot of cash to feed the cash eating dreams that he has.