For thousands of SpaceX employees, the long-awaited initial public offering (IPO) on Friday (June 12) marked a significant leap in their wealth. Approximately 4,400 current and former employees are set to become millionaires.
According to CNN, it is common for employees in tech companies to receive substantial equity as compensation, especially in the early stages of a company’s startup. If you are a company founder, you may not have much cash on hand to pay employees, but you can issue them some low-priced stocks in the hope that these stocks will appreciate significantly in the future.
According to Hill.com, a San Francisco investment platform, SpaceX’s valuation is expected to reach $1.77 trillion, with around 4,400 current and former employees becoming millionaires. Approximately 400 employees are expected to become “billionaires”, with the value of their stock holdings exceeding $100 million.
Andrew Benson, CEO of Hill.com, told CNN on Friday that SpaceX’s IPO stands out for the diversity of equity incentives it offers to employees.
“When you think of equity incentives, you typically think of white-collar positions such as engineers, business development team members, growth team members, marketing personnel, legal personnel, and so on. What makes SpaceX unique is the variety of employees it includes like welders, machinists, and other types of employees who typically do not receive equity incentives anywhere else.”
Internal staff at the company must adhere to a “lock-up period” to prevent a sell-off immediately following the IPO. However, Gwynne Shotwell, President and COO of SpaceX, expressed confidence on Friday morning that SpaceX employees are not in a rush to sell off.
“I am very proud that over half of the employees actually increased their holdings of the stock on IPO day, totaling nearly $1 billion.”
SpaceX officially went public on Friday. Shortly after the start of midday trading, SpaceX’s stock price rose to $165 per share, an increase of about 22% from the target price of $135. This pushed SpaceX’s market value above $2 trillion, higher than the previously estimated $1.77 trillion, making it the sixth largest company in terms of market value in the United States.
The company’s listing not only significantly increased the wealth of approximately 4,400 current and former employees but also made CEO Elon Musk the world’s first trillionaire.