Elon Musk’s rocket company, SpaceX, is preparing for its highly anticipated initial public offering (IPO) on the New York boards this Friday (Saturday AEST), drawing varied interest from Australian growth funds. While many rivals are observing from the sidelines, funds like Munro Partners and Plato Investment Management are making initial investments. SpaceX, a company founded by Elon Musk, develops and manufactures advanced rockets and spacecraft, providing launch services for commercial and government missions, and aiming to facilitate human space exploration. The company recently reported a net loss of US$4.9 billion last year, despite revenue climbing 33 per cent to US$18.6 billion, and has never been profitable.
Nick Griffin, chief investment officer at the $9.1 billion Munro Partners, confirmed a small investment in SpaceX, acknowledging its substantial US$2.57 trillion valuation. Griffin aims for some exposure should the stock surge post-debut, despite the price being “a little hard to stomach.” He anticipates better buying opportunities in months, once insider lock-ups expire and private investors begin to divest, a common occurrence after major IPOs. Plato Investment Management adopts a similar strategy, buying shares to build an index-weighted position. David Allen, managing Plato’s Global Alpha Fund, highlighted the company’s 100 times price-to-revenue multiple, warning such a valuation leaves little room for error.
Conversely, several fund managers, including Alex Pollak of Loftus Peak and Joseph Ziller of Ziller Funds Management, are holding back. Pollak, despite expecting an initial rally, remains on the sidelines, noting SpaceX does not meet S&P 500 Index inclusion criteria like profitability. Ziller, while bullish on the space industry’s attractive unit economics, cited the hefty valuation as a deterrent. Hedge fund manager Jack Hu, who built a position earlier, plans to sell any new IPO-allocated shares in the initial days of trading, capitalising on the expected surge from passive and benchmark-aware investors.
