Elon Musk is reportedly preparing to take SpaceX public, a move that could be his most dangerous gamble yet. For all his triumphs with Tesla and Starlink, Musk now faces the ultimate test: convincing the markets that a company still burning cash on R&D and beset by regulatory delays warrants a valuation that would dwarf most FTSE 100 firms.
From where I sit, the maths does not add up. SpaceX is a private company with a cult following, built on government contracts and a relentless ambition to colonise Mars. That is a noble goal, but it is not a business model. The City has seen this script before. We remember the dot-com bubble, when companies with no profits were valued on 'eyeballs'. Today it is 'missions to Mars' and 'Starlink subscriptions'. The hype is intoxicating, but the bottom line remains stubbornly blank.
Consider the numbers. SpaceX raised $750m in a private round last year, valuing it at $137bn. That is already more than Boeing and Lockheed Martin combined. Yet SpaceX’s revenue is a fraction of those defence giants. Its Starlink unit is generating cash, but the satellite internet market is crowded. Amazon’s Project Kuiper is coming, and OneWeb is already in orbit. Then there is the Starship rocket, a beautiful piece of engineering that has yet to make a single commercial flight. Development costs are astronomical, and the timetable is slipping.
Central bank policy is another headache. The era of cheap money is over. The Federal Reserve and the Bank of England are still hiking rates to fight inflation. Gilt yields are rising, and risk appetite is shrinking. A SpaceX IPO in this environment would be like launching a rocket into a hurricane. Investors are fleeing speculative assets. They want cash flows, not dreams.
Musk himself is a wild card. His Twitter antics and public spats have unsettled the boardrooms of America. He is a genius, but genius does not always translate to shareholder value. Tesla’s stock has halved from its peak. A SpaceX flotation would expose the company to the same quarterly earnings circus that Musk despises. Do we really think he will tolerate analysts asking about profit margins on human spaceflight?
There is also the matter of capital flight. UK investors are already pulling money out of London-listed tech stocks. The IPO market is in the doldrums. ARM, another high-profile float, flopped. If SpaceX lists in New York, as is likely, British investors will be left watching from the sidelines as American pension funds soak up the shares. This is a missed opportunity for London, but given the regulatory headaches and the political noise, who can blame Musk?
Fiscal responsibility demands a reality check. A company that depends on NASA contracts and billionaire vanity projects is not a stable investment. The government’s role here is also questionable. The UK has poured subsidies into space, but where is the return? We are propping up an industry that is essentially a playground for the super-rich. Meanwhile, public services are squeezed. It is time for the Treasury to ask: is this the best use of our money?
In summary, the SpaceX IPO is a high-stakes gamble. It could mint a new generation of millionaires, or it could go down as one of the great flops of the decade. I would not bet the house on it. The market is a harsh judge, and Elon Musk is about to find out that even his charm cannot bend the laws of financial gravity.
