SpaceX is planning to go public in June, and its initial public offering (IPO) is generating plenty of buzz among investors and analysts. The company recently merged with Elon Musk’s artificial intelligence (AI) company, xAI, which itself owned the Grok chatbot and social platform X.
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The combined entity is reportedly seeking to raise up to $75 billion, which would shatter the record set by Saudi Aramco’s $29 billion IPO in 2019. That would value the company at about $1.75 trillion, making it the sixth-most valuable company in the U.S., according to Barron’s. But what does the IPO really mean for investors, and what might Musk’s real endgame be?
According to Reuters, Musk is setting aside 30% of SpaceX stock for individual investors, roughly triple the amount that’s normally available during an IPO. This could be a smart strategy, as retail demand is expected to be extraordinarily high.
As described by Rowan Taylor, managing partner of Liberty Hall Capital Partners, “This is one of those lifetime moments in which people may say they just have to get in.” Between the attention drawn by Musk and the excitement behind space exploration and AI, investors should expect the SpaceX IPO to be a watershed event.
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The projected almost $2 trillion valuation for SpaceX would rank the company ahead of enormous, well-known companies like Meta Platforms and Berkshire Hathaway. Barron’s noted that such a lofty valuation for SpaceX would equal 75 times estimated 2026 sales and 160 times estimated earnings before interest, taxes, depreciation and amortization (EBITDA).
Barron’s analysis noted that SpaceX would have to execute on many fronts, including making it cheaper to go to space. However, according to Forbes, nearly all of the company’s current revenue comes from Starlink.
This can be either a drag or a boon, depending on how the different elements of the company operate.
The long game when it comes to SpaceX could be an integration with Musk’s other controversial company, Tesla. Barron’s reported that Musk has spoken about the “convergence” of all of his companies and noted that Baird analyst Ben Kallo said, “I think it’s probable. It looks like that’s going to happen.”
Such a company would be a conglomerate of futuristic technologies combining AI and space travel and would no doubt generate further investor excitement. However, such a tie-up is still speculative at this stage, and it might create additional concerns regarding valuation.
