ORLANDO, Fla. – What to Know:
- SpaceX’s IPO is expected to be one of the largest public offerings in history.
- Even investors who don’t buy IPO shares directly may gain exposure through retirement accounts.
- Financial experts caution that excitement surrounding SpaceX and other AI-related companies could be a sign of growing market speculation.
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The long-awaited SpaceX initial public offering is set to begin trading on Friday, giving everyday investors their first opportunity to buy shares in Elon Musk’s rocket, satellite, and AI company.,
But while many investors are eager to get a piece of the company behind Falcon rockets, Starship, Starlink satellites, and Grok, financial experts warn that enthusiasm can sometimes cloud good judgment.
The IPO could also have implications far beyond those who choose to buy shares directly, as recent changes by major stock indexes could allow SpaceX to quickly become part of some retirement portfolios and index funds. Translation: millions of Americans may soon own a stake in the company without ever placing a trade themselves.
We spoke with CBS News Business Analyst Jill Schlesinger about the hype surrounding the SpaceX IPO, what it could mean for retirement savers, and why investors should be careful not to let excitement override their long-term financial plans.
Here’s the full transcript of our interview:
WKMG-TV:
SpaceX goes public this week as Elon Musk sells off a piece of the company to the public. And shares will start trading on the Nasdaq exchange. CBS News Business Analyst Jill Schlesinger is here to break down what is likely to be the biggest initial public offering in history.
Jill, Friday is going to be busy. Investors are scrambling to get a piece of the SpaceX IPO. What’s your advice to them?
Jill Schlesinger:
Well, look like any risky venture we’re talking about a stock or crypto, maybe an investment in your friend or small business, the best way to protect yourself, but also to participate is to limit the amount you purchase to just a fraction of your overall investments, maybe 5% or less.
Let’s remember this is a company that’s currently operating at a loss. It’s a big bet on Elon Musk, and something could go wrong here. Let’s not make it too big of a wager in your own personal financial life.
WKMG-TV:
Now, Jill, this is something I found really interesting. What does this mean for the average person who has a 401 K?
Jill Schlesinger:
Well, even if you don’t want to buy shares through the IPO or you can’t, SpaceX may soon be available inside your retirement account.
Last month, the Nasdaq and the Russell Indexes announced that they were making rule and methodology changes which would allow SpaceX to be included in its indexes. Now, that is very strange because this can happen within weeks of the deal.
Well, in the past, when you have a newly public company, they’d have to wait a year before getting included in an index.
Now there is one holdout. If you’re somebody who uses Standard and Poor’s funds like the S&P 500 index, S&P said they are not changing their criteria. SpaceX will not be in an S&P fund until at least mid-2027.
WKMG-TV:
And Jill, what does this deal signal about the current market?
Jill Schlesinger:
Well, listen, if you look at SpaceX and you say, wow, this is a company that’s targeting a valuation of $1.8 trillion and that is happening even though they’re unprofitable, it tells you that there are a lot of investors out there who were paying up for potential growth.
So, I mean, I’m just wondering if you look at this IPO, future deals for Anthropic and OpenAI, these are just massive deals without any precedent. So when I see that, I look at big risk-taking, loosening of listing and index standards, tons of enthusiasm for an innovation might be that everything’s fine, but it also could be a sign of an overheated market.
Now, in the past, we’ve seen overheated markets continue for months and sometimes years. But we also know they can end badly. So just be careful here. Stick to your game plan. Don’t get too excited on the way up so that you’re not too disappointed on the way down.
WKMG-TV:
Jill, great advice. Thank you so much.
You can see Jill regularly on CBS Mornings and the CBS Evening News. For more analysis, go to JillOnMoney.com.