Chris Forrester — Barely a day passes without a major story covering Elon Musk’s plans for an Initial Public Offering (IPO) appearing on one or other of the world’s major newspapers. The hype is considerable, and full marks must be awarded to SpaceX’s staffers and public relations teams for generating the column inches.
But some wiser heads are also cautioning that would-be investors should take a breath before investing the family silver into SpaceX stock.
Musk’s plans are – undoubtedly – very ambitious. Potential investors cannot be blamed for looking at the 300-times reward in Tesla’s stock value for those who bought in during the early days. Last Monday SpaceX’s Musk and CFO Bret Johnsen met with 21 bankers to explain the IPO the details of which will be published for the public in late May.
The base of the IPO is formed by Starlink and with almost 11 million users today, a path to a potential 50 million over time and the potential to become a dominating celestial telco and a value that could be stratospheric, or as Buzz Lightyear and Neil deGrasse Tyson have said: “To Infinity and Beyond”. There’s talk of $40 billion of high-margin recurring revenue and an IPO valuing the business at $2 trillion or more.
The challenge for the bankers and then individual investors is how the package is being created. SpaceX’s Starlink broadband-by-satellite base prospect is undeniable, but it is the “other” revenue verticals that are uncertain. These include Starship, which however spectacular its test flights have been has yet to launch and land successfully and to start earning its keep.
It is the same with Starlink’s Direct-to-Cellular (D2C, Starlink Mobile) scheme and Musk’s ability to tap into the world’s smart-phone users who for whatever reason want to by-pass conventional telephony suppliers. Emergency calls when out of region could be valuable, as might some users who want a Starlink App on their smart phones the way they used to add dozens of other Apps most of which have rarely been used.
Military and governmental usage is another useful addition, as are Commercial, Mobile (Trains/Buses), Maritime (fishing and especially Cruise lines) and aircraft. Bring these elements together and there’s undoubtedly a solid base to the business.
Indeed, those elements are already on SpaceX’s earnings statements, and the IPO prospectus will expose and detail the facts behind these verticals. But it is the “known unknowns” that should worry potential investors, and these include the funding of Starship, and missions to the Moon and beyond. Space exploration is usually a national skill-set and while SpaceX has proven its ability to revolutionise rocket launching and satellite building, only time will tell whether these past experiences (with Falcon 9) can translate into xAI and Starship as well as ‘X’ itself. SpaceX’s Number 1 customer for its Falcon launches is SpaceX and Starlink. Will non-Starlink launch demand stay robust? Finally, and perhaps the greatest ‘unknown’ is Musk’s orbiting data centers and talk of up to 1 million satellites.
And some wise number-crunchers have looked at the prospects, and suggest that in order for an investment in SpaceX to end up at $2+ trillion overall valuation, then SpaceX would have to be worth more than 33 percent of ALL public companies, COMBINED! ($20 trillion of the roughly $60 trillion market cap for all public companies combined).
SpaceX hints that the IPO will give priority to retail investors (as distinct to institutional investors) and up to 30% of the cash raised. This could be good news, but retail investors tend not to be ‘sophisticated” (in the jargon) and consequently not quite so tough in how they scrutinise the IPO prospectus.
Consequently, there are some questions that a potential retail investor might be advised to consider: Top of the list is orbital collisions, which are an increasing worry for the industry. Starlink deorbited hundreds of satellites in the first-half of 2025 and they were mostly under 5-years old. In other words, refreshing the fleet is an expensive pastime and while necessary and planned for, there’s the ever-present risk of unplanned and highly dangerous collisions.
Question 2 is to confirm the precise status of xAI which last year suffered a $1.43 billion net loss. In fairness, these could be considered perfectly sensible ‘early stage’ investments for future profits. Indeed, will xAI be included in the IPO?
Question 3 must be Starship itself. Nine launches to date and there have been individual problems which hopefully the engineers and technicians will solve, remedy and improve to perfection as it exits the R&D phase and moves into adoption and deployment. But that goal could be expensive.
Nasdaq says it is happy to change its index rules effective May 1 to allow a fast-track access to its Nasdaq-100 entry in 15 trading days. This is a new rule and is made to tempt a listing for the IPO and thus forcing billions in passive index buying from Day One.
Savvy investors will examine SpaceX’s prospects, but one fan is perfectly happy to back further Musk investments. Anthony Scaramucci, a financier and former – for a very brief period – White House Communications Director, is already an investor in SpaceX and while admitting that Musk enjoys a “cult of personality” premium, he will be making further investments into the SpaceX IPO. He adds that valuing SpaceX “defies conventional metrics”. He also added that he is especially intrigued by the prospect of orbital data centers powered by solar energy in space and beamed back to Earth through satellites, calling the concept “fascinating” and saying that while it sounds like science fiction now, he believes Musk is “better positioned to do it than anyone else on earth” to make it real.
He added that Starlink alone is “worth a fortune”.
Orbital data centers and their combined 100 terawatts of AI computing power could be a genuine game-changer, despite it being – today – largely theoretical.
So, the ultimate question is whether Elon will be right again. Tesla was not a fluke. Tesla batteries were not a fluke. PayPal was not a fluke. SpaceX was definitely not a fluke, and Starlink is revolutionary in expanding broadband around the planet. Can he do it again?
