SpaceX, Elon Musk’s private rocket ship to the stars, is reportedly preparing for a stock market listing that could value the company at north of $200 billion. For a man whose last public offering, Tesla, turned into a rollercoaster of meme-stock mania and regulatory scrapes, this is a bet of cosmic proportions.
The whispers from Wall Street suggest SpaceX will file for an IPO as early as next year, leveraging its Starlink satellite internet business as the revenue anchor. But here in the City of London, where we still remember the fizzle of Virgin Galactic, the mood is one of cautious scrutiny.
Let’s run the numbers. SpaceX has never turned a profit. Its launch business is cyclical, relying on government contracts and a handful of commercial clients. Starlink, while promising, has yet to prove it can generate the sort of cash flows that would justify a multibillion-dollar valuation. Capital flight from risk assets is already underway, with the FTSE 100 dipping on tightening liquidity. The Bank of England’s tightening cycle has made gilts look attractive again, and institutional investors are recalibrating their portfolios.
Musk’s previous ventures have a habit of defying gravity. Tesla’s market cap once exceeded the combined value of the next ten automakers. But Tesla had a product you could touch and sell to consumers. SpaceX’s core business is launching payloads and building space infrastructure. It is a capital-intensive, low-margin game. The only way an IPO makes economic sense is if Musk convinces the market that SpaceX is not a rocket company but a telecommunications giant, with Starlink as the cash cow.
The regulatory hurdles are immense. The Federal Communications Commission and international bodies will scrutinise Starlink’s spectrum usage and orbital debris. Meanwhile, competition is heating up. Amazon’s Project Kuiper and a host of Chinese state-backed constellations are eyeing the same skies.
London investors, traditionally cautious on tech, are likely to sit this one out. The LSE has seen a parade of high-profile flops, from Deliveroo to THG. The appetite for loss-making disruptors is thin, especially as gilt yields rise to offer real returns for the first time in a decade.
But Musk has a habit of proving cynics wrong. If SpaceX can deliver a 10% margin on Starlink subscriptions, the arithmetic might work. For now, I am keeping my powder dry. The bottom line: this is a gamble for the brave, and the City is not feeling brave.
