No. of Recommendations: 1
I wonder what Buffett thinks about this?
SpaceX Could Use an IPO Process Originally Designed for Small Biz
SpaceX’s initial public offering promises to be a defining capital-markets event. Elon Musk’s commercial space and satellite company could use an IPO process originally designed for small companies, allowing them to file paperwork confidentially ahead of the offering.
• Confidential IPO filings were created by the 2012 Jumpstart Our Business Startups, or JOBS, Act. The goal was to boost capital markets activity by making it easier for small, high-growth companies to raise capital through IPOs. It allows them to file a draft S-1 registration statement.
• The S-1 describes the business, risks, recent performance, capitalization, and plans for the money raised in detail. The confidential process allows a company and the SEC to go back and forth on the S-1 outside the public’s view. That way, companies can avoid disclosing sensitive information.
• The confidential filing process was expanded in 2017 for larger companies, and Airbnb, Uber Technologies, and Snap were three that took advantage of the change. Ultimately the registration statement is made public, and this process compresses the time between being made public and the IPO.
• When SpaceX’s S-1 is finally public, investors will have a chance to read about its AI strategy and a lot more. SpaceX is responsible for more than half of all orbital launches and for creating the modern space economy by driving down costs with reusable rockets.
What’s Next: After the S-1 is public, a company has to wait 15 days before beginning its roadshow to pitch the offering to money managers. In the case of SpaceX, the amount raised could approach $75 billion, which would surpass the near-$30 billion raised by Saudi Aramco, the largest IPO in history at the time.
—Al Root
