The City has seen nothing like it since the South Sea Bubble. Elon Musk, the man who turned electric cars into a religion and space travel into a sideshow, has launched what he calls the ‘world’s biggest stock market debut.’ And who is he relying on to keep the spreadsheets in order? British-born engineers, naturally. Because if there is one thing this country still produces, it is people who can calculate risk while sipping lukewarm tea.
The float, which values the company at an eye-watering $400bn, is being hailed as a triumph of Anglo-American engineering. But let us not kid ourselves. This is not about physics or code. It is about capital, and capital flows where it is treated best. The fact that these engineers are British is a reminder that our brain drain continues. They are not building this empire in Islington. They are doing it in Texas, where the taxman is less interested in their success.
Let us talk about the numbers. At $400bn, this company is worth more than the entire FTSE 100 minus the top five. That is a lot of faith in a man who tweets at 3am. The IPO is expected to raise $50bn in fresh cash, making it the largest ever. But history tells us that big floats often come with big headaches. Remember Facebook? It took years to recover from its disastrous debut. And that was run by Harvard graduates, not British engineers who studied at Nottingham.
What does this mean for the UK? Not much, directly. The shares will list on the Nasdaq, not the LSE. The bankers are in New York. The lawyers are in Delaware. But the engineers are British, and that is a tragic metaphor. We train them, we give them a world-class education in mathematics and physics, and then they leave for the land of opportunity. The Treasury should be weeping into its spreadsheets.
Central bank policy is also relevant here. The Federal Reserve is keeping rates high to fight inflation, while the Bank of England is stuck between a rock and a hard place. High yields on US Treasuries are sucking capital out of London. This IPO will only accelerate that trend. Every pound that goes into this float is a pound that could have been spent on British infrastructure. But no, we would rather have a functioning railway than a stake in a man’s rocket company.
The market efficiency crowd will tell you that this is fine. Capital should go where it is most productive. And perhaps this company, with its mix of AI, robotics, and space, is the future. But let us not ignore the froth. The hype. The fact that Musk himself said the valuation is ‘almost absurdly high.’ Even he knows that markets are not always rational.
Gilt yields are moving already. The 10-year gilt is up 5 basis points this morning as investors reposition for a world where American tech dominates. The pound is wobbling. The FTSE is flat. This is a classic case of capital flight dressed up as innovation. We are selling our brightest talent and buying back their shares at a premium. It is financial masochism.
So what should you do? If you are a retail investor, approach with caution. IPOs are for insiders, not for the public. The big money is made before the listing. After that, it is a casino. Unless you have a time machine, do not bet the farm on a man who has a habit of smuggling flamethrowers onto the market.
For the UK, this is a wake-up call. We need to make our economy more attractive to capital and talent. Lower taxes. Less regulation. A proper industrial strategy that does not just involve subsidising French-owned train manufacturers. Otherwise, we will keep exporting our best minds and importing their expensive products.
In the end, this IPO is a testament to British engineering. And a damning indictment of British finance.
