In a deal that turns the space race into a cash race, SpaceX has priced its initial public offering at a valuation of $75bn, making it the largest stock market listing in history. British investors, it seems, are leading the charge, scrambling for a piece of the action. But as the champagne corks pop in the City, one cannot help but wonder: is this a moonshot worth taking, or just another speculative bubble inflated by Elon Musk’s celebrity?
Let’s cut through the cosmic dust. SpaceX is not your typical float. It is a private company that has revolutionised rocket technology, slashing launch costs and reusing boosters like a thrifty housewife hoarding Tupperware. The firm has a backlog of contracts with NASA, the Pentagon, and a growing list of commercial clients. It also has Starlink, its satellite internet venture, which promises to beam broadband from the heavens. That, for now, is a cash-burning experiment, but Musk has convinced the market it is the next copper wire.
At $75bn, the valuation is eye-watering. That puts SpaceX on par with Boeing and Lockheed Martin, two giants with decades of profit and government patronage. But SpaceX, for all its engineering brilliance, has yet to turn a reliable profit. Its revenue in 2020 was around $2bn, a fraction of its peers. The price tag implies a multiple of nearly 40 times sales, which in any sane market would be considered a gravity-defying leap.
Yet sanity is not the order of the day. Central banks have flooded the system with cheap money, and yield-starved investors are chasing anything that promises a return. British institutions, with their pension funds and insurance mandates, have been particularly aggressive. They see SpaceX as a rare opportunity to buy into a disruptive technology before it reaches full maturity. But there is a catch: the company is heavily dependent on Musk’s vision and whims. As Tesla has shown, Musk’s charisma can move markets, but it can also derail them.
The float itself is unconventional. SpaceX is not issuing new shares to raise capital; it is allowing existing investors to cash out. That means the company does not directly benefit from the listing, save for the market discipline that comes with being public. For Musk, who owns a controlling stake, it is a liquidity event that gives him more ammunition for Mars. For early backers, it is a chance to take profits.
But here is where British investors should tread carefully. The IPO market has been a minefield lately. Just ask those who bought into Deliveroo or THG: both crashed after their debut. SpaceX is not a food delivery app, of course. It has real assets, real contracts, and a real technological edge. But it operates in a sector where failure is spectacular. Rockets explode; satellites go dark. And the space industry is not immune to the laws of supply and demand. A recession could slash demand for launches and tighten government budgets.
There is also the matter of capital flight. British investors, flush with cheap sterling, are pouring money into dollar-denominated assets. That is fine when the exchange rate works in your favour, but if the pound strengthens, returns will be clipped. The Bank of England is already talking about rate hikes, which could prop up sterling and squeeze overseas investments.
Nevertheless, the enthusiasm is understandable. A successful IPO would be a vote of confidence in British capital markets, which have been struggling to attract big tech listings. It would also put the City at the centre of the new space economy. But investors must remember: the bottom line is everything. And SpaceX’s bottom line, for now, is more promise than profit.
In the end, the SpaceX float is a bet on the future. It is a bet that Musk will deliver on his promises, that the market will keep its appetite for risk, and that the laws of economics can be bent as easily as the laws of physics. It is a bet that, for British investors, could pay off handsomely or leave them floating in zero gravity. Let’s just hope they have their insurance paid up.
