Elon Musk’s SpaceX has reportedly finalised a secondary share sale that values the private rocket firm at a staggering $1.75 trillion, a figure that has London’s asset managers salivating at the prospect of a blockbuster initial public offering. The valuation, confirmed by sources close to the transaction, represents a 65% premium over the previous round and underscores the market’s insatiable appetite for space-related equities. For UK investors, already grappling with sluggish domestic listings and a flight of capital to US tech giants, this could be the celestial lifeline they have been seeking.
The deal, which saw existing shareholders offload stakes to new investors, values SpaceX at more than triple the market capitalisation of Boeing and Lockheed Martin combined. It also eclipses the $1.1 trillion valuation of Tesla, Musk’s electric car venture. The message from the market is clear: space is no longer a speculative frontier but a viable asset class. Yet seasoned City hands would be wise to temper their enthusiasm with a dose of fiscal realism.
Consider the maths. At $1.75 trillion, SpaceX’s price-to-sales ratio would hover around 50, based on estimated revenues of $35 billion from its Starlink satellite constellation and launch services. That is rich, even by tech standards. Compare this to Apple, which trades at a paltry seven times sales. The premium reflects not just growth prospects but a speculative froth that often precedes a correction. Central banks may have tamed inflation for now, but the era of cheap money is over. When gilt yields rise, as they inevitably will, high-multiple stocks are the first to fall.
For UK investors, the allure is undeniable. The London Stock Exchange has been starved of tech listings, with ARM Holdings defecting to New York and Deliveroo’s IPO fizzling. A SpaceX debut would be a coup for the City, potentially drawing billions in capital flows. But it also exposes a deeper malaise: Britain’s pension funds are underweight in domestic equities, preferring the liquidity of US markets. A SpaceX listing could reverse that trend, but only if the company delivers on its promise of interplanetary profitability.
Musk’s timing is impeccable. The sale comes amid a resurgence in risk appetite, with the S&P 500 hitting new highs and volatility indices subdued. But don’t mistake this for stability. The market is pricing in a “soft landing” for the economy, yet the Bank of England’s Monetary Policy Committee remains hawkish, wary of sticky services inflation. A sudden spike in gilt yields could dash hopes of a rate cut, sending shockwaves through high-growth stocks. SpaceX might be a moonshot, but gravity always wins.
There is also the question of capital flight. UK investors are increasingly chasing US listings, with a record £1.2 trillion now held in American equities. A London debut for SpaceX would stem that outflow, but it would require the company to accept a dual listing or even a primary listing on the LSE. Given Musk’s fractious relationship with regulators, particularly after his spat with the SEC, that seems unlikely. More plausible is a New York listing, with London left to watch from the sidelines.
Fiscal conservatives will grumble about yet another government subsidy programme, as SpaceX has benefited from NASA contracts and tax breaks. But the private sector is driving this rocket. The secondary sale was oversubscribed, with sovereign wealth funds and pension managers clamouring for a piece. That demand is a testament to the market’s efficiency in pricing risk, even if the valuation itself borders on the absurd.
In the end, this is a story about liquidity. The Federal Reserve’s quantitative tightening has drained reserves from the banking system, but money is still sloshing around private markets. SpaceX is exploiting that window before the liquidity taps shut. For UK investors, the question is whether they can afford to miss out or whether they are already late to the party. As I’ve said before in this column, the bottom line is simple: in a world of fiscal profligacy, the only certainties are debt, taxes, and gravity.
