Elon Musk is no stranger to high-stakes bets, but the prospect of a SpaceX public listing may be his most audacious yet. For UK investors, already nursing scars from the Battery Day fiasco and the Twitter circus, the prospect of holding shares in the world’s most valuable private company is a siren call. But let’s not kid ourselves: this is a gamble, not an investment.
The company’s valuation, reportedly north of $180bn, is already pricing in a Martian colony that is decades away. Strip away the hype, and you have a rocket launch business that, while profitable on paper, is heavily reliant on government contracts and a fickle satellite internet market. Starlink, the broadband-from-orbit venture, has yet to prove it can generate sustainable cash flows beyond the early adopter phase.
Then there is the Musk factor. His track record with public companies is mixed. Tesla shareholders have endured wild swings, and the Twitter acquisition (now rebranded X) has been a masterclass in value destruction. The billionaire’s attention is divided across multiple ventures, and his penchant for tweeting market-moving statements is a compliance nightmare. The FCA will be watching closely.
For the UK investor, the maths is straightforward. Gilt yields are finally offering a decent return, with the 10-year above 4%. Why gamble on a company whose primary revenue source is launching other people’s satellites when you can get a risk-free return on Her Majesty’s debt? The answer, of course, is the allure of exponential returns. But be warned: the space race is littered with the wreckage of overhyped ventures.
The listing structure is also a concern. Musk has hinted at a dual-class share system that would give him outsized voting power, effectively removing any meaningful shareholder oversight. This is a recipe for governance disasters. UK institutions, already wary of such structures after the Deliveroo and Wise listings, may think twice before piling in.
Currency risk adds another layer. The pound has been volatile, and a SpaceX listing would likely be in dollars. Sterling’s recent weakness against the greenback means UK investors face a double gamble: the company’s performance and the exchange rate. Hedge that, and you kill the upside. Don’t hedge, and you could be wiped out by a currency swing.
Let’s not forget the regulatory headwinds. The UK Space Agency is keen to position Britain as a hub for space commerce, but the FCA’s listing rules are stringent. SpaceX may opt for a New York listing to avoid the UK’s cumbersome prospectus requirements, leaving London investors on the sidelines or forced into more expensive derivatives.
The bottom line: this is not an investment for widows and orphans. It is a high-octane punt for those who can afford to lose their entire stake. The market volatility will be extreme, driven not by earnings but by Musk’s tweets, launch failures, and the whims of the space tourism market. If you have the stomach for it, go ahead. But do not expect the City to shed a tear when the shares tumble.
In the meantime, I will stick to my gilts and a well-diversified portfolio. The space race can wait.
