SpaceX, the private rocket company founded by Elon Musk, finally made its long-awaited debut on the stock market this morning. The opening price of $120 per share values the firm at approximately $180 billion, making it one of the largest IPOs in recent memory. But as the champagne corks pop in Silicon Valley, the City of London watches with a raised eyebrow. The company’s co-founder, Tom Mueller, who famously called himself ‘employee number one,’ was quick to remind the press that this is a business built on engineering genius, not financial prudence.
Let us strip away the hype. SpaceX has never posted a full-year profit. In its most recent filing, the company disclosed an operating loss of $600 million on revenues of $4.6 billion. The prospectus is littered with risk factors: reliance on government contracts, the volatile nature of space tourism, and the astronomical costs of R&D. Yet the market is pricing it as if it has already conquered Mars. This is a classic tech bubble behaviour. I have seen it before with Tesla and Amazon. The bulls will argue that SpaceX is a monopoly in launch services, but monopolies can be broken. Blue Origin and other rivals are nipping at its heels.
Inflation remains stubborn at 3.5%, and the Bank of England is expected to hold rates next month. Gilt yields are rising as investors demand higher returns. Where does a risky space stock fit into that landscape? It does not. This is a speculative play for those who can afford to lose their shirts. The retail investors who pile in today will be the ones left holding the bag when the sector consolidates.
Capital flight is a real concern. Global instability has driven money into US assets, but that can reverse quickly. If the Fed tightens further, high-growth stocks like SpaceX will be the first to suffer. The company’s debt load is manageable for now, but its capital expenditure is voracious. The Starship programme alone has consumed billions. One failed test flight could wipe out a quarter of the market cap.
Mueller’s nostalgic remark about being employee number one is a reminder of the company’s scrappy origins. But nostalgia does not pay dividends. The bottom line is simple: SpaceX is a fantastic engineering company but a questionable investment at this valuation. The market is pricing in perfection. There is no margin for error. As a financial editor, I would advise caution. Let the early believers take their profits. Wait for the inevitable correction. Then, perhaps, take a small position. But only if you have the stomach for volatility.
