“Our mission,” says the opening sentence of SpaceX’s listing document with a straight face, “is to build the systems and technologies necessary to make life multi-planetary, to understand the true nature of the universe, and to extend the light of consciousness to the stars.”
The last bit has an echo of the laughable WeWork, which was going to “elevate the world’s consciousness” via the medium of shared office spaces. But, yes, if SpaceX could tick off all the items on Elon Musk’s to-do list, one could make a case that the company should be valued at $1.77tn (£1.32tn).
Unfortunately, there is the small matter of the here and now. SpaceX made a loss of $4.9bn in 2025 on revenues of $18.7bn, so it is being priced on arrival on the US Nasdaq market at almost 100 times those revenues. That is an other-worldly valuation, even before one starts to estimate the multi-year spending requirements of AI and multi-planetary adventures. Another description would be absurd.
SpaceX’s established space technology – as opposed to kit required to build, for example, “a self-sufficient city on Mars” – is market-leading, it should be said. The main attraction is Starlink, which contributes 60% of revenues and has a commanding position in satellite broadband connectivity around the world, especially in remote areas.
Starlink is enabled by SpaceX’s rocket-launching abilities. Reusable technology has reduced the cost of launches to “the tens of millions” from billions historically, according to the prospectus. There is scope to boost third-party revenues because, again, nobody comes close.
But those two divisions, even on a generous view, don’t get the valuation remotely close to $1tn. The real hope value is being ascribed to the artificial intelligence operation xAI, which was folded into SpaceX earlier this year. The accounting value was $250bn at the time, but the marketing pitch now, in effect, will be to consider how AI horizons have expanded. Most of the cash raised in the IPO will be directed at xAI.
The rest is a mixed bag. The social media platform X, which has been attached to xAI, is a rounding error. It is a Musk indulgence that doesn’t belong in SpaceX; a piece of space junk, as it were. But one might ascribe some long-term potential value to the revolutionary idea of putting AI datacentres in space.
Add it all up, though, and it’s hard to disagree with Morningstar’s analysis, based on its view of future cashflows, that SpaceX’s value is closer to $780bn. “We think the company has been significantly overvalued and investors will have opportunities to buy the stock at more attractive levels after the IPO,” it says.
Does that mean the stock will crash on the launch pad? Well, no. First, it’s plainly possible – or probable – that the Musk factor will overcome boring, fuddy-duddy valuation metrics, at least initially. The observation that Musk tends to make money for his investors is made even by fund managers who are supposed to be cynical.
Second, Wall Street’s biggest battalions are on the ticket as advisers, underwriters and hype-merchants: Goldman Sachs, Morgan Stanley, JP Morgan, Citigroup and more. Those banks will be highly remunerated to find sufficient buyers for up to $86bn-worth of new shares.
Third, the promoters’ job is made easier by the fact that some buyers will be forced buyers. SpaceX is being rushed at indecent haste into stock market indices, obliging low-passive tracker funds to get on board. Such funds’ sole motivation is to hold stocks in proportion to their weight in an index, meaning they are agnostic on price.
The dominance of low-cost trackers, which now comprise about half the US market, will be ruinous one day, many have warned. Too much unthinking money exaggerates momentum, runs the argument, making booms bigger than they would be otherwise, and threatening bigger reversals when momentum turns.
In theory, the SpaceX IPO is exactly the sort of event that might trigger a reversal. The listing is enormous, the mission statement is hubristic and the valuation defies common sense. In practice, the cult of Musk is probably still strong enough to get the listing off the ground without an accident. Come back in a year or two: descent to an earthly valuation must surely follow.
