Musk's SpaceX IPO holds both promise and peril
Elon Musk’s rocket and AI company presents potential for investors. But its futuristic, unproven plans also carry significant financial risks. SpaceX will be at the
Elon Musk’s rocket and AI company presents potential for investors. But its futuristic, unproven plans also carry significant financial risks. SpaceX will be at the center of attention on financial markets this Friday as the company makes its stock-market debut. The Elon Musk-led rocket, satellite and artificial intelligence company plans to raise as much as $75 billion (€65 billion) by selling nearly 555.6 million shares at $135 apiece. That would make it the largest initial public offering (IPO) in history, breaking the previous record set by Saudi Aramco in 2019, when the oil giant went public and raised $26 billion. The listing would instantly turn SpaceX into the seventh-biggest publicly traded US company. Because only 4% of its equity will be on offer, the total valuation would be a whopping $1.8 trillion. SpaceX wants to use the proceeds from the IPO to fund its ambitious projects such as installing AI data centers in space and missions to Mars. Data centers in space: Solution or disaster? To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video SpaceX has sky-high ambitions Founded in 2002, SpaceX has, over the years, made significant advances in space technologies such as reusable rockets, emerging as the world's dominant launch services provider. The company's ultimate goal is to colonize Mars and establish a civilization there. Closer to Earth, SpaceX operates Starlink, a massive network of around 8,000 satellites, which offers broadband internet services to consumers, governments and enterprise customers. Starlink is currently the company's only profitable business.
Earlier this year, SpaceX expanded into artificial intelligence by merging with xAI, which Musk created in 2023 to challenge firms like ChatGPT-maker OpenAI, and Anthropic. Musk wants to install giant AI data centers in space to use solar for energy and the cold vacuum of space for free cooling, which would allow the facilities to bypass the energy and cooling constraints they face on Earth. Founded in 2002, SpaceX has made significant advances in space technologies such as reusable rockets Image: Steve Nesius/REUTERS Space Still a loss-making company In its IPO prospectus, SpaceX touted a potential $28.5 trillion market for its offerings, saying that it's in a unique position to offer integrated, space-based AI and internet services. Still, there are concerns over the sky-high valuation, particularly for a loss-making company. Last year, SpaceX made $18.7 billion in revenue, but posted a $4.9 billion net loss. The company has said that it does not expect to be profitable any time soon. It also has considerable debt — around $29 billion as of the end of March. Given its financials, SpaceX would be valued at around 94 times its annual revenue, a massive premium over stocks of highly profitable Big Tech firms such as Apple, Alphabet or Nvidia. After evaluating SpaceX's finances, Morningstar, a US-based financial services firm, has valued the company at $780 billion — a sharp discount from the IPO's valuation at $1.8 trillion. It said the outlook for SpaceX is "very uncertain," and success will depend on whether the company's orbital AI platform works and offers meaningful operating cost advantages over terrestrial computing.
The BriefWire