As the hype builds for the reported $1.5 trillion (£1 trillion) IPO of Elon Musk’s SpaceX later this year, there will be plenty of critics who argue the company’s marketing has more hot air than one of its rockets. It has been claimed by some that the IPO will be worth more than the top seven companies currently listed on the London Stock Exchange – including century-old giants such as Shell, HSBC and AstraZeneca – combined. And yes, sure, there is probably an element of wishful thinking in these reports, as there often is with Musk. But SpaceX also has the potential to become one of the giants of the 21st-century economy and is very likely to prove its worth.
SpaceX’s will be the biggest IPO of the year. This week, Musk folded his xAI business, which includes the social media site X and artificial intelligence chatbot Grok, into his space business. The merger values the combined businesses at $1.25 trillion (£915 billion), and when it joins the stock market, it is expected to be priced at at least $1.5 billion. Given the way technology stocks are soaring, it may well be even more.
SpaceX is way out in front of all its rivals
It is, of course, a lot of money for a business that has yet to turn a profit. There will be plenty of sceptics who dismiss it as a part of a bubble that has spun out of control. In fairness, there will be an element of truth to that. SpaceX is consuming vast amounts of cash and has yet to generate a return. It is also hard to see where furious social media posts fit within a company making rockets and satellites.
Even so, SpaceX is still a fantastic opportunity for investment. It has pioneered low-cost rockets, turning what was once a prestige industry completely reliant on state funding into a routine commercial operation. Its Starlink satellite-based internet system has made it simple to use the internet on planes, has made communications available in remote (or repressive) parts of the world, and may even take on established broadband providers such as BT. It is exploring ways of building data centres in space where the vast amounts of electricity its systems consume can be generated far more cheaply. The space economy is starting to become a reality, generating commercial possibilities that may only become apparent over the next few years. SpaceX is way out in front of all its rivals, and that will be very valuable.
The most important point perhaps, though, is this. We have been here before. When Tesla was first listed in June 2010, it raised $226 million (£166 million) in fresh capital from investors and had a total market value of $1.7 billion (£1.25 billion). It seemed like a lot for a company that made electric vehicles, a niche product that few people were interested in at the time. But its value now? $1.3 trillion (£952 billion). It is the most valuable auto company in the world, at least measured by its share price.
Musk has plenty of critics, and with multiple companies and political projects, he probably spreads his energy too thinly. Yet there is no doubt that he is also the greatest entrepreneur of our times. Sure, SpaceX will be very expensive when it comes to the market. But it is worth a lot more than the likes of Shell and HSBC – and that will quickly become very clear.
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