Elon Musk’s SpaceX is reportedly eyeing the London Stock Exchange for what would be the largest stock market debut in history, with a targeted valuation of $1.75 trillion. The implications for the City of London are staggering, but the numbers demand a closer look.
A $1.75tn market cap would dwarf the entire FTSE 100, making SpaceX a colossus among British equities. For context, the combined market capitalisation of the FTSE 100 stands at roughly $2.
5tn. A single company nearly matching that would distort indices, inflate weights, and force passive fund managers into a high-risk bet on a single stock. Index tracking could become a game of reality distortion.
The LSE, desperate to retain relevance post-Brexit, would gain a jewel in its crown. But at what cost? Gilt yields, already under pressure from sticky inflation and government borrowing, could see further volatility as foreign investors pile into the IPO.
Capital flight from other sectors is likely, as institutional investors rotate into this mega-cap growth story. The Bank of England, already wrestling with inflation above target, might view this as a speculative mania. Yet the allure of owning a piece of Mars colonisation is undeniable.
Skeptics will point to SpaceX’s lack of quarterly profits and the billionaire’s track record of hyping timelines. Market efficiency, however, suggests the pricing will be rationalised by arbitrageurs and short sellers. The real test will be whether London can handle such a concentrated risk without resorting to bailouts.
Fiscal hawks should brace for the inevitable lobbying for tax breaks and regulatory carve-outs. Ultimately, this is a bet on Elon’s vision. The City is no stranger to bubbles, but a $1.
75tn IPO is a new frontier.
