Whalesbook
Valuation: Big Vision, Big Losses
SpaceX is preparing for what could be the largest IPO ever, seeking a $1.75 trillion valuation. The company's pre-IPO filing outlines an ambitious vision, citing a $28.5 trillion total addressable market (TAM) where artificial intelligence represents over 90%. This projection heavily emphasizes AI for businesses, a segment valued at $22.7 trillion, positioning SpaceX as a future AI leader rather than just a space company. However, this vision contrasts sharply with its financial performance. SpaceX reported a $4.94 billion net loss for 2025, a significant drop from its $791 million profit in 2024. The loss stems from a massive increase in capital expenditures, which surged nearly five-fold to $20.7 billion in 2025. Of this, $12.7 billion was specifically for AI initiatives, exceeding spending on its core space and connectivity operations. Investors must accept a future market far larger than current operations can support, as Starlink, its main profit driver, earned $11.4 billion in revenue and $4.4 billion in operating profit in 2025, only to be offset by the AI division's losses.
AI Ambitions: A Late Start in a Fierce Race
SpaceX's focus on AI pits it against industry giants. While the company is investing heavily in AI infrastructure like GPUs, its current AI development spending is lower than major hyperscalers like Meta, OpenAI, and Google. The AI market is expected to grow rapidly, with projections for AI hardware and software reaching $780 billion to $990 billion by 2027, growing 40% to 55% annually. Yet, SpaceX enters a well-established and fiercely competitive sector. Competitors such as OpenAI and Anthropic, already leaders, are reportedly considering their own IPOs, intensifying the competition for market share. SpaceX plans to use tools from its xAI acquisition and projects like Macrohard with Tesla. However, the filing notes its AI division is still in early stages and reported a $6.4 billion operating loss in 2025.
Elon Musk: The Central Figure and Key Risk
SpaceX's pre-IPO filing highlights its deep reliance on Elon Musk. Holding four key titles and controlling the board, his absence could create an existential risk. The filing calls Musk “one of the great visionaries of our generation” but warns that appointing a successor might not happen promptly or at all. Musk's unusual compensation plan adds another layer of complexity. His largest stock awards depend on achieving ambitious, almost science-fiction goals, such as establishing a self-sustaining Mars colony of one million people and operating large orbital data centers. To fully earn these awards, SpaceX would need to reach a $7.5 trillion valuation, far beyond its current IPO target. This setup ties Musk's personal ambitions directly to the company's financial future. His continued leadership is crucial, but it also creates a major single point of failure risk. His compensation package stands apart from typical corporate structures, presenting unique dynamics for investors.
Starship Delays and Future Hurdles
SpaceX's ambitious plans for orbital AI data centers and lunar/interplanetary industrialization are acknowledged as early-stage projects that may not become commercially viable. The prospectus points to space's harsh conditions, unique failure modes, and technical complexity as business risks. These ventures heavily depend on the Starship program's development. However, Starship has faced at least two years of development delays. These delays affect NASA's Artemis program, where Starship serves as the Human Landing System, possibly pushing the moon landing target past 2028. Critical steps like in-space refueling, requiring multiple tanker launches, remain technically difficult. The commercial viability of orbital data centers is also in doubt, with SpaceX lagging major hyperscalers in AI infrastructure spending. Projections for projects like Moon and Mars settlements are based on unproven technologies.
The Financial Reality Check
SpaceX's requested $1.75 trillion valuation faces questions when compared to its current financial performance and competitive standing. While Starlink shows strong revenue growth, projecting $12.3 billion in 2025, this is overshadowed by company-wide losses from heavy AI investment. SpaceX's valuation suggests a Price-to-Sales (P/S) multiple of 53x based on projected 2025 revenue of $15 billion. This is exceptionally high and rare outside of fast-growing tech firms. Historically, large IPOs have had mixed outcomes, with some companies faltering post-listing when reality doesn't meet expectations. The AI market, SpaceX's key growth area, is already led by well-funded competitors, making its late entry risky. Rivals like Blue Origin, valued lower at an estimated $100 billion in 2024, are also seeking government contracts, though their progress is slower than SpaceX's. The overall valuation may depend more on investor belief in Elon Musk's vision and disruptive capabilities than on current profits or a clear path to AI market leadership.