Elon Musk's SpaceX has turned to the bond market for the first time, days after its record-breaking stock market debut, as the company seeks fresh funding to support its growing investments in artificial intelligence and next-generation space technology, according to a report in Business Today.
IPO and Market Reaction
SpaceX raised about $75 billion through its initial public offering after selling more than 555 million shares at $135 each, making it the largest IPO ever and valuing SpaceX at nearly $1.8 trillion, Business Today reported, citing Reuters. The stock surged initially, briefly pushing the company's market value above those of Amazon and Microsoft before retreating.
| Metric | Value |
|---|---|
| IPO proceeds | ~$75 billion |
| Shares sold | >555 million |
| Offer price | $135 |
| Valuation | ~$1.8 trillion |
| Nasdaq debut | June 12 |
However, the stock has since declined sharply. It dropped as much as 16% on Monday and has lost nearly a quarter of its value over the past three trading days.
Credit Ratings and Bond Offering
The company disclosed that it held more than $100 billion in cash and cash equivalents, highlighting its financial strength even as it ramps up spending. Proceeds from the bond offering will be used for general corporate purposes, repayment of borrowings under an existing bridge loan facility, and related expenses, Reuters reported, according to Business Today.
Moody's assigned SpaceX a Baa1 rating, while Fitch gave it a BBB+ rating, both within investment-grade territory. Analysts said the decision allows SpaceX to raise capital without issuing additional shares and diluting existing shareholders.
"Musk maintaining supermajority voting control through a dual-class structure means issuing bonds helps preserve ownership while raising funds," said Adam Sarhan, chief executive of 50 Park Investments.
Spending on AI and Starship
SpaceX reported revenue of $18.7 billion last year, up 33% , driven largely by growth in its Starlink satellite internet service, which now serves more than 10 million users through thousands of satellites in orbit. Earlier this year, SpaceX merged with Musk's artificial intelligence company xAI, a move the company described as central to its long-term plans for AI-powered computing infrastructure.
However, heavy spending on AI infrastructure, Starship development, and the integration of xAI pushed the company into a net loss of nearly $5 billion. SpaceX also recently signed an agreement reportedly worth up to $6.3 billion to provide additional computing capacity from Musk's Colossus 2 data centre to AI startup Reflection AI.
Musk's Trillionaire Status
The blockbuster IPO transformed Elon Musk's personal fortune. He currently controls about 42% of SpaceX and holds roughly 82% of the company's voting power. The value of his SpaceX stake alone is estimated at hundreds of billions of dollars. Combined with his holdings in Tesla and other ventures, analysts estimate his net worth has crossed $1 trillion, making him the world's first trillionaire. Some estimates suggest his fortune could eventually approach $2 trillion if SpaceX and Tesla continue to gain value.
Implications for Capital Markets
The bond offering highlights SpaceX's efforts to secure long-term funding as it balances rapid expansion in artificial intelligence, satellite internet, and space exploration while navigating the volatility that the stock has experienced since its debut. The investment-grade ratings from Moody's and Fitch indicate that the company has sufficient capacity to meet its financial obligations even as it pursues ambitious expansion plans. For corporate treasurers and finance executives, the move demonstrates how even cash-rich firms can use debt to preserve ownership and fund capital-intensive projects without diluting existing shareholders.
Sources:
