SpaceX Share Offering Values Company at $1.75 Trillion, Public Trading Commences 12 June
On 13 October 2024, SpaceX achieved a successful launch and capture of its Starship booster near Boca Chica, Texas, demonstrating a key advance in reusable rocket technology. This engineering feat, however, serves as a prelude to a far more expansive undertaking: the public offering of SpaceX shares, set to begin trading on 12 June.
This initial public offering (IPO) is poised to value the company at an ambitious $1.75 trillion, placing it among the world's most valuable corporations. For perspective, this valuation is for a company that reported nearly $5 billion in losses last year. While SpaceX's rocketry and Starlink satellite communications network are profitable, their combined estimated value is around $300 billion, a mere fraction of the target IPO price.
The bulk of SpaceX's colossal valuation rests on its involvement in artificial intelligence, specifically its xAI company and plans for space-based data centres. The company's prospectus asserts that $26.5 trillion of its $28.5 trillion total addressable market lies within the AI sector. Critics, such as economist Sinead O'Sullivan, question this premise, suggesting that the public is primarily investing in the 'Elon Musk brand' rather than a clearly defined space or AI industry.
Musk's substantial control over SpaceX, holding 85% of voting rights despite owning 42% of shares, presents a further point of contention for potential investors. Financial journalists have highlighted that such a lack of control for shareholders typically warrants a discounted share price, yet 'cult of Elon Musk' followers appear willing to pay a premium. Musk's history of leveraging his wealth for political ends, including substantial donations to US political campaigns and involvement in the internal affairs of other states, also draws scrutiny.
The SpaceX IPO is positioned as the first in a series of major public offerings from AI frontier companies, including Anthropic and OpenAI. Concerns persist among some analysts about a potential 'dot com' style boom and bust, given the influx of new shares in companies with unproven profitability at such scale. However, index funds may absorb some of this supply, potentially mitigating drastic price fluctuations.
