SpaceX raised $25 billion in debt less than two weeks after its IPO. The company saw $90 billion in orders. That's a 3.6x oversubscription rate, which means three dollars wanted in for every dollar that got a seat.
Most companies wait a quarter. Maybe two. Time to let the equity settle. Time to pretend they care about capital structure optimization. SpaceX said f*ck that and went straight back to the trough.
The oversubscription tells you everything. Institutions lined up to lend money to a company that just raised equity. They could have bought the stock two weeks ago. They chose debt. They chose the instrument that caps their upside and pays them 5% while Elon launches cars into orbit.
Retail bought the IPO. Pension funds bought the bonds. One group gets the volatility. The other gets the coupon. Guess which group thinks they're going to Mars.
SpaceX needed $25 billion for rockets or satellites or whatever comes after Starlink. The specifics don't matter. What matters is they asked for money twice in fourteen days and got it both times. That's not a capital strategy. That's a magic trick.
The bond buyers looked at a two-week-old public company and said yes we trust this duration risk. The equity buyers looked at a fifty-year-old aerospace dream and said yes we trust this Elon risk. Both groups are correct. Both groups are idiots.
You know what you call a company that raises equity and debt in the same month? Desperate or brilliant. The market hasn't decided which. The market just keeps writing checks.
Somewhere a retail trader is holding SpaceX shares at the IPO price, watching bond investors get paid quarterly, wondering why he didn't just buy the f*cking bonds.
Photo by Sven Piper on Unsplash
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