Crypto market traders are ignoring SpaceX’s expected IPO price and assigning higher valuations to Elon Musk’s rocket, satellite and artificial intelligence company before it goes public. Perpetual futures linked to SpaceX were trading at about $165 on crypto trading platforms such as Hyperliquid and Binance on Thursday morning New York time, suggesting a valuation of about $2.2 trillion. The company issued shares at a fixed price of $135 in a record initial public offering.
SpaceX's IPO is set to complete the pricing process on Thursday. Reports on Wednesday said demand for subscriptions to the offering is understood to be more than four times the size of the offering. People familiar with the matter said the terms of the offering are unlikely to change, meaning SpaceX will raise about $75 billion at a valuation of about $1.8 trillion.
Between Musk supporters chasing SpaceX stock regardless of valuation, and veteran investors like Jim Chanos calling it "the IPO of hopes and dreams," crypto perpetual contracts traders appear to be siding with the former, even as prices have retreated from over $200 in May.
Since such products seem to predict artificial intelligence chip maker Cerebras Systems Inc. Market interest in this type of product has increased following a strong launch in May. Cerebras shares soared 68% on their first day of trading.
Now, SpaceX’s IPO — far and away the largest in history — is testing the predictive power of this blockchain-based market.
Pratik Kala, portfolio manager of digital asset hedge fund Apollo Crypto, pointed out that investors buying these contracts now are betting that SpaceX will have a premium of at least 20% from the IPO price on the first day of listing.
He said, "The SpaceX perpetual contract is setting a higher bar for traders to enter the contract now. Instead, traders who are short the perpetual contract are actually betting on a lackluster first-day trading performance for the stock."
Perpetual contracts have no legal claims against the companies they track and are subject to multiple risks. Funding rates required to maintain a position, fluctuating liquidity, settlement rules, and reference pricing data for external assets all affect contract prices. Therefore, large price movements may reflect both retail leverage or scarcity of supply and the company's intrinsic value.