Investors buying into SpaceX's nearly $2 trillion IPO are making a high-stakes wager that CEO Elon Musk can turn a fast-growing satellite business into something far bigger, using an unproven rocket to unlock an ambitious push into AI.
Musk has grown SpaceX into the world's largest rocket business by launching thousands of Starlink internet satellites and pioneering reusable rockets that have transformed the economics of space.
But the company is seeking to be valued not just on those laurels but on the juggernaut it might become if Musk's ambitious bets to colonize Mars, put data centers in space and become a leading AI company pay off.
At the heart of those bets is an assumption that a set of events will unfold in the right order: Starlink will generate the cash to bankroll the next-generation Starship rocket, Starship will slash launch costs to expand the market, and that expanded market will ultimately support the new AI business.
"The risk isn't whether SpaceX is a real business; it clearly is," said Josh Gilbert, analyst at eToro. "The risk is whether a $1.75 trillion valuation adequately prices in the execution challenges that come with being part rocket company, part internet provider, part AI venture."
SpaceX is testing investor patience with huge losses it disclosed in its initial S-1 IPO filing on Wednesday: $4.28 billion in the three months ended March 31, an eightfold increase from a year earlier.
From building a trillion-dollar EV company to leading SpaceX as the first private firm to fly NASA astronauts, Musk has repeatedly turned high-risk engineering bets into dominant businesses, fueling investor belief that even his most ambitious SpaceX assumptions may prove achievable.
"You are not going to justify a $1.75 trillion or $2 trillion valuation for SpaceX using traditional fundamental metrics alone," Rainmaker Securities cofounder Greg Martin said.
