SpaceX, Elon Musk’s rocket venture, is aiming for a $1.75tn valuation in what would be the largest stock market debut in history. For British investors, the prospect of owning a piece of the private spacefaring giant is tantalising. But as an analyst who has watched too many market debuts turn into celestial busts, I urge caution. The figure, roughly the combined market cap of BP and Shell, is staggering for a company that lost over $500m last year. Gilt yields are rising, inflation remains sticky, and capital is fleeing risk. Is this a moonshot too far?
Let’s crunch the numbers. At $1.75tn, SpaceX would trade at over 100 times trailing revenue, pricing in a future where Mars colonies are profitable. The company’s Starlink division, while promising, faces regulatory headwinds and competition from Amazon’s Project Kuiper. Meanwhile, Musk’s distractions with Twitter/X and Tesla have raised governance eyebrows. The City of London’s fund managers, ever hungry for growth, will need to weigh the hype against fiscal reality.
Consider the market backdrop. The Bank of England is tightening, and the FTSE 100 is dominated by value stocks, not speculative tech. British pension funds, stung by the collapse of London Capital & Finance and the Woodford scandal, are wary of unprofitable unicorns. Capital flight to US markets has already hit a record. A SpaceX listing would likely occur on the Nasdaq, not the LSE, draining further liquidity from our shores.
Yet, there is a case for bullishness. SpaceX’s rocket reusability has slashed launch costs, and its dominance in the satellite launch market is unrivalled. Starlink’s subscriber base is growing exponentially. If the company can achieve profitability by 2025, as Musk claims, the valuation may prove prescient. But timing is everything. The IPO market has been sluggish since the 2022 crash, and a $1.75tn behemoth could swamp demand.
For British retail investors, the allure is obvious: a chance to buy the next Apple before it becomes a household name. But the smart money will wait for the lock-up expiry, when insider selling often clobbers the stock. Institutional players should demand a discount; after all, the market is a voting machine in the short term and a weighing machine in the long term. And right now, the votes are split.
In conclusion, SpaceX’s debut is a textbook case of market irresponsibility: a government contractor with a cult CEO, charging into a frothy market. British investors, from the salons of Mayfair to the trading desks of Canary Wharf, will be watching closely. My advice? Keep your feet on the ground, even if your eyes are on the stars. The bottom line is this: at $1.75tn, the risk-reward ratio is celestial, but not necessarily profitable.
