SpaceX values itself at $1.75tn ahead of stock market debut

SpaceX is gearing up for a significant public stock listing next week, with an initial price range set between $126 and $140 per share. This pricing strategy values the company at a staggering $1.75 trillion, a notable increase from its earlier $1.25 trillion valuation this year. The company aims to raise $75 billion through its initial public offering (IPO), which is slated to begin trading on the Nasdaq stock index on June 12.

This early price estimate is a rare move in the stock market. If shares sell at or above the expected price, Elon Musk, who holds over 80% of SpaceX stock, could become a trillionaire. However, historical data suggests caution, as nearly half of companies that have gone public in the last 30 years have seen their value decrease post-listing.

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There is no doubt the valuation is incredibly rich.

Analysts express mixed views on the valuation. Samuel Kerr, head of equity capital markets research at Mergermarket, described the valuation as "incredibly rich," noting that SpaceX's price-to-sales ratio exceeds that of other major tech giants like Alphabet, Amazon, and Apple. He suggests investors might overlook this due to a focus on future earnings and revenue rather than current performance.

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But SpaceX is being valued on future earnings and revenue rather than the here and now, so some investors might be willing to overlook that.

Despite the high valuation, SpaceX's financial performance shows a complex picture. The company reported $18.6 billion in revenue last year but incurred a net loss of $4.9 billion. In the first three months of this year, it generated $4.7 billion in sales but reported a net loss of $4.3 billion. Its balance sheet indicates $102 billion in assets, including rockets and equipment, against $60.5 billion in debt.

Ruth Foxe-Blader, managing partner at Citrine Venture Partners, highlighted the appeal of SpaceX's numerous ambitious projects. The company's "sprawling, enormous project with so many different selling points, and so many points that really point to the future" could be a key factor for investors.

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SpaceX is just an absolutely sprawling, enormous project with so many different selling points, and so many points that really point to the future.