SpaceX launches with a $1.8 trillion valuation—despite deep losses

Elon Musk’s space company SpaceX generated less than $19 billion in revenue last year and is deep in the red—yet it aims to be worth nearly $1.8 trillion at its IPO.

With proceeds of around $75 billion at an offering price of $135, it will also be the largest IPO ever. And after trading is expected to begin on Friday, the valuation could rise even further given the high demand.

Founded by Musk back in 2002, the company is best known for its rockets. The tech billionaire’s plan was to drastically reduce the cost of rocket launches and eventually establish a colony on Mars.

At the time, space travel was the domain of superpowers—and accordingly, his activities were initially met with skepticism. But SpaceX succeeded in building cheaper rockets—and making them reusable, which reduced costs even further. Especially since the end of the Space Shuttle program, SpaceX is now practically indispensable for U.S. space exploration and the military.

SpaceX succeeded in building cheaper rockets.

KEYSTONE

The satellite internet service Starlink generated the majority of revenue—around eleven billion dollars—last year. To achieve this, SpaceX launched approximately 9,600 satellites into orbit. Currently, special antennas and receivers on the ground are usually still required, but with the next generations of technology, smartphones are expected to increasingly be able to access the network directly from space.

This would provide mobile internet even in areas where there is no cellular network. Starlink reached over ten million customers by the end of March. Amazon is building a competing service but has significantly fewer satellites. A few months ago, Musk also had SpaceX acquire his AI company xAI, which had previously absorbed the online platform X.

The valuation targeted for the IPO is more than 90 times higher than last year’s revenue—and that is exceptionally high. For the currently most valuable company, the chipmaker Nvidia, valued at nearly $5 trillion, this figure is around 20; for Apple, it is around 10. SpaceX explains the high valuation with the prospect of future business. According to the IPO prospectus, the company sees a total market of $1.6 trillion for satellite connectivity alone—though that figure includes all providers.

xAI also comes into play here: SpaceX aims to secure a share of the business with AI applications for enterprises, which is estimated to be worth more than $22 trillion in total. Among other things, Musk plans to build data centers in orbit—though it remains to be seen whether this is technically feasible.

Musk is often overly optimistic in his announcements, which sometimes aren’t fulfilled until years after the deadlines he sets. At Tesla, the electric car manufacturer he also leads, for example, autonomous driving still doesn’t work the way he promised over the past decade.

In traditional IPOs, institutional investors such as banks and funds usually take the lead. Musk, however, has relied heavily for years on an army of fans among private investors. In SpaceX’s IPO, roughly one-fifth of the nearly 555.6 million shares are expected to be reserved for them, as reported by the Wall Street Journal. Typically, this share is between five and seven percent. Demand from private investors is likely to far exceed supply nonetheless.

Musk will retain full control of SpaceX even after the IPO, with more than 80 percent of the voting rights. This is based on shares with greater voting power. He is also likely to become the first person with a net worth of more than one trillion dollars. Currently, the financial news service Bloomberg estimates his net worth at around $700 billion.

Three major stock index providers—Nasdaq, FTSE Russell, and MSCI—have changed their rules, and as a result, the stock can be included in their indices more quickly than was previously the case. This automatically means early additional demand from funds that track the index composition.

S&P Dow Jones, meanwhile, is holding its ground and maintaining that the stock can only be included in the S&P 500 index after twelve months on the market.