The City’s reaction to the news that SpaceX is considering a stock market listing has been, predictably, a mix of excitement and caution. For years, Elon Musk has played the role of the brilliant but erratic engineer, his companies Tesla and SpaceX defying gravity and, often, conventional financial logic. Now, with a potential IPO, he is asking investors to back the most speculative asset of them all: the future of interplanetary travel.
Let’s cut through the hype. SpaceX is not a conventional company. It does not generate predictable cash flows; its revenue depends on a handful of government contracts and the occasional commercial launch. The real prize, in Musk’s vision, is the Starship project: a fully reusable spacecraft designed to carry humans to Mars. That is decades away, if it ever happens. Meanwhile, the company burns cash at a rate that would make a hedge fund manager wince.
Yet the market is salivating. Why? Because this is Elon Musk’s playbook: promise the moon, deliver a fraction, and watch the share price soar. Tesla’s valuation is a case study in irrational exuberance. At its peak, it was worth more than all other carmakers combined, despite producing a tiny fraction of their vehicles. SpaceX will likely follow the same trajectory: a high-beta asset that moves on sentiment, not fundamentals.
But there is a deeper risk. A listing would expose SpaceX to the whims of the public markets. Musk’s leadership style, a mix of brilliance and chaos, does not sit well with institutional investors who demand quarterly results and governance. The Securities and Exchange Commission has already tangled with him over his Twitter outbursts; a listed SpaceX would face even greater scrutiny.
Then there is the broader economic picture. Inflation is sticky, interest rates are higher for longer, and the era of cheap money is over. Tech stocks, particularly unprofitable ones, have been hammered. A SpaceX IPO would be a test of whether the market’s appetite for risk has truly returned or whether this is just another speculative bubble waiting to burst.
For the UK investor, this is not just a story about a rocket company. It is a story about capital allocation. Should pension funds and retail investors be putting money into a venture that might pay off in a generation, or is this a gamble better left to venture capitalists with deep pockets and a tolerance for loss?
My view is cynical, I admit. But after 20 years in the City, I have learned that the market’s enthusiasm for the next big thing often ends in tears. Musk has delivered before, but that does not mean he will deliver again. The bottom line is that SpaceX’s IPO is a bet on the future of humanity. And as any trader knows, a bet that far out is a bet against the odds.
For now, the ticket to the moon is still a lottery ticket. Investors, be warned.
