Is SpaceX worth $1.75 trillion? The risks behind the most anticipated IPO on the market

Starship takes off on May 22, 2025
Reproduction/SpaceX
SpaceX will be in the spotlight of financial markets with its debut on the stock exchange this Friday (12/06). The rocket, satellite and artificial intelligence (AI) company led by Elon Musk plans to raise up to US$75 billion (R$388 billion) by selling almost 555.6 million shares at US$135 each.
The company could break the record for the largest Initial Public Offering (IPO) in history, displacing the position held by the oil giant Saudi Aramco, which, in 2019, went public and raised US$26 billion.
Do you have any suggestions for a report? Send to g1
SpaceX could yet become the seventh largest publicly traded company in the USA. Since only 4% of its share capital will be available, the total valuation would be a staggering $1.8 trillion.
SpaceX intends to use the IPO proceeds to fund its ambitious projects, such as setting up AI data centers in space and missions to Mars.
Now on g1
SpaceX Ambitions
Founded in 2002, SpaceX has over the years made significant advancements in space technologies such as reusable rockets, emerging as the world's leading launch services provider. The company's ultimate goal is to colonize Mars and establish a civilization on the red planet.
Closer to Earth, SpaceX operates Starlink, a huge network of about 8,000 satellites, which offers broadband internet services to consumers, governments and corporate customers. Starlink is currently the company's only profitable business.
Earlier this year, SpaceX expanded into artificial intelligence by merging with xAI, which Musk created in 2023 to challenge industry players such as OpenAI, creator of ChatGPT, and Anthropic.
Musk aims to install giant solar-powered data centers in space and utilize the cold vacuum of space for cost-free cooling, which would allow facilities to bypass the energy and temperature constraints they face on Earth.
SpaceX, still a loss-making company
In its IPO prospectus, SpaceX highlighted a potential market of US$28.5 trillion for its products, as it is uniquely positioned to offer integrated space-based AI and internet services.
This very high valuation, however, raises concerns, mainly due to the fact that the company is loss-making. Last year, SpaceX earned US$18.7 billion, but recorded a net loss of US$4.9 billion. The company said it does not expect to become profitable anytime soon. It also has considerable debt, which reached about $29 billion at the end of March.
Taking into account its financial data, SpaceX would be valued at about 94 times its annual revenue, a huge premium over shares of highly profitable big tech companies like Apple, Alphabet or Nvidia.
After evaluating SpaceX's financials, Morningstar, a US-based financial services company, valued the company at $780 billion - significantly lower than the IPO valuation of $1.8 trillion.
The company said the outlook for SpaceX is "very uncertain" and that success will depend on the company's orbital AI platform working and offering significant operating cost advantages compared to terrestrial computing. demand exceeds supply. Many Musk supporters cite the billionaire's vision for SpaceX and his success in turning Tesla into a global automotive and technology giant as reasons to invest.
Most IPOs offer only about 5% to 10% of the total offering to individual investors, according to financial services firm Fidelity. But SpaceX has reserved a much larger share of shares - up to 30%, or $22.5 billion - for individual investors.
"Many individual investors are unaware that about 25% of IPOs fall on the first day of trading, and an even higher percentage falls over longer horizons," Jay Ritter, an IPO expert and finance professor at the University of Florida, told DW.
"But institutions are willing to assign high valuations to SpaceX and the big AI companies because others in the technology sector have demonstrated the ability to grow and become extremely profitable," he added, pointing to names like Alphabet, Nvidia and a few others with annual profits exceeding $100 billion.
"If they hadn't done that, there would be a lot more concern about valuations," Ritter emphasized. "But these other companies, including Microsoft and Broadcom, went public at much lower valuations and therefore had greater upside potential for investors."
The Nasdaq stock exchange also changed its rules in May to allow big newcomers like SpaceX to join its index within 15 trading days, rather than the previously required three months. The move means that passive investment funds that track the Nasdaq 100 index will need to buy SpaceX shares sooner.
Musk maintains tight control over SpaceX
Experts warn that SpaceX shares could be more volatile when they begin trading, as the company has made only about 4% of its capital available for the IPO. The fact that many investors compete for a limited supply of shares can generate strong price fluctuations.
Even after the IPO, Musk will maintain tight control over the company. The billionaire currently owns about 42% of SpaceX, but after the IPO, a special dual-class share structure ensures that he retains about 82% of the total voting power on the company's board, meaning no one will be able to fire him.
The company also restricts shareholders' ability to file class-action lawsuits, requiring them to bring their cases in a specialized Texas commercial court. If a judge refuses, disputes are referred to private arbitration, a provision seen as a severe limitation on investors' rights.
Morningstar warned that Musk's dominance over SpaceX is also a risk factor and that minority shareholders will have limited ability to influence the company's decisions. "This concentration of decision-making power in a single individual creates governance risks that require careful consideration," he noted.

Source: G1