How is a SpaceX pre-IPO trade settled?
If the position is held until the IPO, settlement is based on the official market capitalisation on the first trading day. The relevant reference point is the closing price on the first trading day used for settlement.
Put simply: what matters is where SpaceX is actually valued at the end of its first day of trading. If that valuation is above the level at which a trader was positioned long, this would be positive for the long position. If it is below that level, it would be negative. For a short position, the logic is reversed.
Example:
A trader opens a long position at a level of 2,000. This corresponds to an expected valuation of $2.0 trillion. At the end of the first official trading day, the relevant market capitalisation is $2.2 trillion. In this simplified example, the valuation has moved $200 billion above the entry level.
If the final valuation is only $1.8 trillion, the market has moved $200 billion below the entry level. For a long position, this would be negative; for a short position, it would be positive.
Why does a pre-IPO market move before the listing?
Because SpaceX is not currently listed, there is no daily traded share price. The pre-IPO market is therefore based on expectations, estimates and new information surrounding a potential IPO.
Important influencing factors include the publication of the S-1 prospectus, new funding rounds, information on Starlink, progress or setbacks at Starship, regulatory developments, institutional demand, sentiment toward technology stocks, comments from Elon Musk and possible IPO delays.
For a company like SpaceX, these factors can have a strong impact. The market is not only valuing the existing business, but also future themes such as satellite internet, space infrastructure, defence, artificial intelligence and long-term projects around Starship.
Reuters recently reported that SpaceX could target a valuation of around $1.75 trillion in a potential IPO and raise about $75 billion. That would make the listing one of the largest in history.
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