Following the injection of $75 billion by investors into the world's largest-ever initial public offering, SpaceX is set to begin trading on the Nasdaq this Friday. Investors are betting that Elon Musk's ambitious ventures in space, communications, and artificial intelligence are substantial enough to justify its staggering $1.77 trillion valuation.

This landmark listing has not only solidified Musk's status as the first trillionaire in history but has also propelled SpaceX into the ranks of the world's most valuable companies, a remarkable feat considering the company reported a loss of nearly $5 billion last year and its revenue is a fraction of that of other tech giants with similar valuations.

"Investors will spend years debating whether the IPO was priced too high or too low. I anticipate significant stock price volatility in the coming months," said Mike Alves, founder of the VIDA Vision Fund, an investor in SpaceX.

The stock's performance will also serve as a test of the so-called "Musk premium," a factor that previously drove Tesla Motors (TSLA) to a $1 trillion valuation, though it has faced pressure during Musk's active involvement with the administration of former President Donald Trump.

"To find a comparable entrepreneur, you'd have to look back a century. He is a unique visionary with exceptional execution capabilities," stated Joel Shulman, CEO of ERShares, which manages an ETF that invests in SpaceX.

Given that SpaceX is widely seen as a precursor to a new wave of mega-listings, market participants will also be closely watching the market's reception of the upcoming IPOs from AI giants Anthropic and OpenAI for signals.

Exchanges and underwriters are under immense pressure to demonstrate they can handle the exceptionally large order flow from this listing and avoid a repeat of the technical glitches that marred Meta's 2012 debut.

Due to the exchange needing to collect buy and sell orders and underwriters potentially delaying trading until supply and demand are balanced, SpaceX shares may not begin trading until midday on their first day. The company priced its IPO at $135 per share, selling 555.56 million shares.

This record-breaking IPO is the culmination of Musk's longstanding ambitions in space and technology, uniquely rewriting Wall Street's IPO rulebook and attracting a massive influx of retail investors into the market.

The World's Largest IPO

Raising $75 billion, this deal more than doubles the proceeds from Saudi Aramco's record 2019 IPO. It will make SpaceX the first U.S. publicly traded company with a market capitalization exceeding $1 trillion, placing it among the top seven most valuable companies in the United States.

"Elon jokes that we do the impossible, just a bit late," said SpaceX Chief Operating Officer Gwynne Shotwell in an interview.

The company's valuation could climb further if underwriters exercise their over-allotment option, a decision typically made within 30 days of the offering.

While SpaceX may have to wait for inclusion in the S&P 500, it is expected to be added to the Nasdaq 100 index rapidly. This would soon make it a significant holding for passive funds and ETFs tracking that index, creating a new source of demand for its shares.

Under Nasdaq's new fast-entry rules, inclusion in the index could take about a month, compared to the typical wait of up to a year.

Some analysts anticipate that SpaceX's entry into major indices will trigger portfolio rebalancing by investors, potentially creating selling pressure for other tech giants as funds rotate into the new stock.

A $28.5 Trillion Market Opportunity

Despite the fanfare surrounding the IPO, determining SpaceX's intrinsic value remains a formidable challenge.

SpaceX claims its total addressable market is $28.5 trillion, describing it as the largest in human history. With its leadership in space—the company states it was responsible for over four-fifths of the total mass launched to orbit in the past three years—and revenue from Starlink, some investors argue it has a solid foundation for growth.

John Belton, a portfolio manager at Gabelli Funds, suggested the closest comparison for SpaceX is Musk's electric vehicle company, Tesla Motors, as both have established businesses alongside what he termed "moonshot opportunities on the other side."

"For Tesla, that includes humanoid robots and other future applications; for SpaceX, it's the AI business," he said.

Challenges to its massive valuation include competition from rivals like Jeff Bezos' Blue Origin, which is accelerating efforts to commercialize space and secure government contracts to tap new markets beyond Earth. Analysts at Morningstar recently stated the company's fair value is approximately $780 billion, less than half of its opening market cap.

"This isn't a stock you buy based on fundamentals. For me, Amazon is a good analogy. It's a company that changed how we live," said Nancy Tengler, CEO and Chief Investment Officer of Laffer Tengler Investments. "If the stock falls to $100, that's not ideal, but it doesn't change our long-term view. We want to be involved."

Shares of space-related companies rose in pre-market trading, with Intuitive Machines, Planet Labs, and Satellogic gaining between 3.3% and 4.5%.