The ‘forced buyers’ who will have to buy shares in SpaceX once it is added to stock market indices such as the Nasdaq (see earlier post) will include UK pensioners, investment experts are warning.

Professor Iain Clacher, Ashok Gupta and Dan Hedley of New Capital Consensus (a group pushing for reform of the UK investment system) are concerned that the 11mn people enrolled in UK defined contribution default funds will be exposed to SpaceX.

In a letter to the Financial Times this morning, they explain:

Nasdaq’s fast-entry rule pulls SpaceX into the Nasdaq-100 index after 15 trading days rather than 63. FTSE Russell has gone further. S&P Dow Jones, to its credit, has held the line.

The mechanical consequence, on our modelling, is that roughly $17.7bn of passive demand will be conscripted into SpaceX on day 15 — of which about $3.9bn comes from MSCI World-tracking vehicles, the benchmark to which the great majority of UK DC default funds are anchored.

Clacher, Gupta and Hedle also point out that the practice of investing UK pension funds in indices such as the Nasdaq, or the MSCI World index, is “mechanically exporting British pension capital” to the balance sheets of the UK’s competitors.

They explain:

The uncomfortable truth is that, for the British DC pensioner the cost is being collected automatically through a default fund whose architecture was never designed for an index whose rules are now being rewritten around a single generation of megastar listings.

SpaceX’s shares are surging in ‘shadow’ financial markets, indicating that its value could surge by 35% when trading begins later today.

Derivatives offered by online brokerage IG are indicating SpaceX’s market value could surge to around $2.4tn, up from the $1.77tn valuation set by last night’s IPO pricing.

That implies that SpaceX’s shares might jump to around $180 when trading begins, cement Musk’s trillionaire status.

Bloomberg have spotted a second market which also implies SpaceX’s shares might pop:

SpaceX-tied perpetual futures, contracts that don’t expire, on crypto venue Hyperliquid were trading around $180, implying a valuation of more than $2.3 trillion.

Forbes has calculated that Elon Musk is on the verge of becoming a trillionaire thanks to the pricing of SpaceX’s record-breaking IPO.

That’s if you add Musk’s stake in SpaceX to his holding in Tesla, which they calculate means Musk is now worth $982bn.

Forbes explain:

Musk, who serves as chairman, CEO and chief technical officer of SpaceX, owns 4.8 billion shares of the rocketmaker, worth $644 billion. He has another 350 million stock options with an exercise price of $8.40 per share, worth $44 billion, giving him a 38% stake in the company, worth $688 billion at the IPO price

They add:

Musk also owns just over 10% of $1.5 trillion (market cap) Tesla, worth $165 billion, plus options to acquire another nearly 8% stake, worth $114 billion.

So SpaceX’s shares only have to rise slightly when they start trading on the US stock market, to around $138.50, to give Musk the title of the world’s first trillionaire.

The SpaceX IPO also led to an unusual protest yesterday in New York.

A 40-foot high giant inflatable of Elon Musk, smiling and shirtless, appeared at Times Square. It was created by the Safe AI Now (SAIN) coalition, to warn of the dangers of SpaceX’s AI assistant Grok.

SAIN say:

The enormous inflatable of Musk is meant to draw attention to a serious issue: SpaceX’s Grok has been widely used to generate illicit images of real people – including children. In fact, a NYT report found that of the 4.4 million images Grok pushed out in a recent nine-day period, an estimated 65% were sexualized or explicit. There are entire online communities, with hundreds of thousands of visitors each week, dedicated to sharing Grok-generated pornography and tips for explicit content generation.

While this inflatable is a fitting metaphor – much like Musk and his companies, it is inflated, full of hot air, and could pop at any minute – it serves as a warning to investors eager to buy into Musk’s SpaceX IPO on Friday morning. Because the reality is, shareholders’ investment in SpaceX means financially supporting a company that has been involved in child exploitation, revenge porn, and worse.

In March, three teenage girls in Tennessee, two of whom are minors, filed a lawsuit against xAI alleging that its Grok image generator used photos of them to produce and distribute child sexual abuse material.

Last week, UK MP Jess Asato took legal action against Elon Musk’s xAI company after saying its Grok tool helped a user produce fake sexualised pictures of her.

Today may go down in history as the day Elon Musk could become the world’s first trillionaire, and the day SpaceX blasted off into the public markets, says Ipek Ozkardeskaya, senior analyst at Swissquote:

The company already made history yesterday by selling 555.6 million shares priced at $135 each, raising the $75 billion that it was looking for and giving the company nearly the $1.8 trillion valuation that it was targeting. It equals the combined value of the 29 biggest IPOs in US history since 2000 – adjusted for inflation – including Meta, Google, Hilton, Airbnb, DoorDash, Uber, Snowflake and GM.

Yes, it’s huge. So today, everyone will be watching SpaceX leave the launchpad. In yesterday’s note, I discussed in detail what to expect from this IPO today, and in the coming weeks and months, for those who are interested in what the future could hold for the company and for the rest of the market.

Good morning. Elon Musk’s SpaceX will touch down on the US stock market today after successfully conducting a record-breaking initial public offering, but will its shares head towards the moon?

Shares in the rockets-to-satellites-to-AI company will begin trading in Wall Street today, after SpaceX raised $75bn through its IPO.

The listing will put SpaceX among the largest public companies, and could see Musk declared the world’s first trillionaire later today.

Last night, SpaceX announced it had has raised $75bn in a record-breaking initial public offering, which values the company at $1.77tn. It successfully sold 555,555,555 shares of its Class A common stock, at $135.00 per share.

Banks underwriting the deal have also been given an “over-allotment option” to buy an extra 83.3m shares, which would pump up the size of the IPO to about $86bn.

SpaceX attracted orders for more than three times the amount on offer, the Financial Times reports – with strong demand from institutions and also retail investors. That could help propel SpaceX’s shares up today, as those who missed out in the IPO (or didn’t get as many shares as they wanted) try to get on board.

This strong demand came despite concerns that the company was overvalued – being sold at 92 times last year’s revenues (a hefty valuation).

Investment research group Morningstar claimed earlier this week that SpaceX was worth only $63 a share – less than half the IPO price of $135 – and warned there is “a major disconnect between market expectations and underlying fundamentals”.

Michael Field, the chief equity strategist at Morningstar, suggests investors should sit out the IPO and wait for “a more attractive entry point down the line”.

All eyes will be on the US markets today to see how SpaceX’s shares perform….

The agenda

• 7am BST: UK GDP report for April

• 2.30pm BST: US stock market trading begins

• 3pm BST: University of Michigan Consumer Sentiment survey