As IPOs go you couldn’t get a more exciting one than the prospect of a company that sends rockets into orbit, and then is able to land the boosters back on the ground to be reused again.
With the upcoming IPO of SpaceX, investors will be invited to strap in for what could be the ride of their lives, as Elon Musk gets set to raise up to $75bn in a fundraising that could value the business at an eye-popping $1.5trn to $2trn.
In what is set to be the biggest IPO ever, there is a huge amount of anticipation and enthusiasm for a project that is likely to capture the imagination of everyone, with the success or otherwise helping to open the door for the likes of OpenAI and Anthropic to perhaps follow suit with IPOs of their own in the coming months.
In that context the stakes are high, not only because the success or otherwise of the SpaceX IPO could determine what comes next, but it could also play a part in how investors view Elon Musk’s other success story Tesla, assuming Musk doesn’t subsequently absorb it under the SpaceX umbrella.
Of course, while investor enthusiasm is high for this latest IPO it’s also important to keep one’s feet on the ground so to speak, pun intended, as the numbers look punchy to say the least.
Last year SpaceX lost $4.9bn on the back of total revenues of $18.7bn. While the increase in revenues of 33% from 2024 was welcome, most of the improvement came from its Starlink service, which contributed about $11.4bn.
The Space division helped to contribute just over $4bn, helped by the reusability of its Falcon 9 rockets, while its AI division which is tied to xAI and X delivered about $3.2bn.
As far as its Q1 26 numbers are concerned revenues were up 15% on the same period last year at $4.7bn, however losses also surged, rising sharply to $4.27bn in the quarter, fuelled by surging capex expenditure in the AI segment, which includes X.
This is the drain down which most of the money is going, with $6.4bn of operating losses last year alone.
The Starlink business helped to offset a good proportion of that with operating profits of $4.4bn, with the satellite and mobile business helping to do the heavy lifting when it comes to generating profits.
The Space division, while generating $4bn in revenue, still posted an operating loss of $619m, due to R&D spend on Starship where development on its V3 launch vehicle will help bring forward the time where it is able to put data centres in space.
While, according to its S-1 filing, SpaceX sees an addressable market of over $28trn, the valuation of almost all of this market comes in outside of its current competencies or businesses, and is based on the success of technologies that haven’t been perfected yet.
This makes it a highly ambitious goal given that all of its future growth will have to come as a result of future capex spending outside of its current markets, as it looks to deliver the ability to put data centres in space, as well as launching missions to the Moon.
Broadband and mobile are estimated to have a combined $1.6trn addressable market, with AI infrastructure adding another $2.4trn, with enterprise applications estimated to fill the remaining gap.
On current revenues of $18.4bn, a $1.7trn valuation would equate to 92 times sales, which on an aerospace or even a telecoms comparison basis, looks stratospherically high.
Even Nvidia, which is the market leader when it comes to semiconductors manufacturing, trades on a hefty price to sales ratio of 19.5/20.6, meaning its market capitalisation is roughly 20 times the size of its annual revenue.
Given this comparison, this SpaceX premium will be dependent on the business delivering on $25.45bn in contractual commitments for 2026 and 2027, as well as its ability to put data centres in orbit by 2028, using the power of solar energy to keep them running.
That would be a huge ask for a business with the ability to deliver on its ambitions here and now, let alone one where the technologies aren’t yet available, and/or are still being developed and tested.
Even looking at the likes of Boeing and Lockheed Martin which are already established contractors in the area of aerospace trade at around 1.7, of forward sales.
Thus, as we look ahead to the upcoming SpaceX IPO, any investor will be basically betting on the success or otherwise, of not only its Starship launch program, but also Elon Musk’s ability to deliver on the orbital data centre part of the business, as a stepping stone to the Moon and Mars.
In what is becoming an increasingly crowded field where space technology is concerned with people like Jeff Bezos also developing solutions, that is likely to come across as quite a tall order in terms of the valuation.
All that aside, betting against Elon Musk in the past hasn’t exactly proved to be a successful endeavour, and this could well go the same way.
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