What could be the biggest initial public offering (IPO) in history is just around the corner. On June 12, shares of SpaceX — trading under the ticker SPCX — will hit public markets, finally giving retail investors a chance to own Elon Musk’s space and technology behemoth.
The company is hoping to raise a whopping $75 billion. If it does, it will eclipse the record $29.4 billion raised in the 2019 listing of Saudi Arabian Oil, or Saudi Aramco. And if all goes according to plan, SpaceX will carry a market capitalization that places it among the top 10 most valuable companies on the planet — $1.8 trillion. It will also make it bigger than Tesla, which is also led by Musk.
To say there’s a lot of buzz surrounding the SpaceX IPO would be quite an understatement. So, if you’re able to get your hands on $5,000 in SpaceX stock on day one, what might that investment look like in five years?
What you’re actually buying with SpaceX stock
When people think of SpaceX, they think of rockets. That’s not wrong, per se, but it’s critical to understand what you’re actually buying here.
The real economic engine of SpaceX is Starlink, the satellite internet provider. This arm of the business is a cash-generating machine, and that’s a good thing for SpaceX, given it is its only profitable arm at this point.
Starlink generated $11.4 billion of the company’s total $18.7 billion revenue, and its operations netted the company $1.2 billion. Starlink is growing fast, with revenue up 50% last year.
The company’s space launch business is also growing, though more modestly. It is also bringing in solid revenue — $4.1 billion last year. However, the unit lost $657 million last year. Financials aside, SpaceX continues to completely dominate the space launch market. No one is really even close to it at this point.
And finally, there’s artificial intelligence (AI). SpaceX recently absorbed, among other Musk businesses, xAI, a frontier model builder competing with OpenAI and Anthropic.
Image source: Getty Images.
At present, the company is seriously behind the competition in its model quality and its market penetration. And its financials. Stripping out the advertising sales that come from the social media platform X, xAI’s core business did just $1.4 billion in sales last year. At the same time, it’s burning about $1 billion a month in cash.
A recent deal with Anthropic could shift that math considerably, but it’s unclear how durable the deal is and how long it would remain in place.
What $5,000 could be worth in five years
In my bull case, I assume that Starlink continues to be a winner, growing at a rapid pace while margins remain high. I assume that space launch continues to dominate the field, and the financials improved: profitable with expanding margins. And xAI has, at the very least, seriously slowed its cash burn and has made real strides in quality and adoption.
My base case assumes that Starlink’s growth continues, but the curve has flattened somewhat. I assume that launch is still very much the leader, but competition has heated up, and consistent profitability remains elusive.
And finally, in my bear case, I don’t assume anything catastrophic, but I do assume Starlink growth has slowed while margins have narrowed. I assume the competition has gained ground in space launch, and that xAI is in a similar place today, burning cash with no clear path to profitability.
Here’s what could happen to your $5,000 in each of these cases.
ScenarioAnnualized Return$5,000 After 5 YearsImplied 2031 ValuationBull case15%$8,745$3.6 trillionBase case7%$6,554$2.5 trillionBear case(15%)$2,638$950 billion
Data source: Author’s calculations.
Is SpaceX stock a buy at its IPO price?
My honest read is that something closer to the bear case will happen.
The fact is, SpaceX’s valuation is extreme. That means it has to have nearly perfect success, or the multiple that the stock trades with will compress. SpaceX is a leader in many of its core businesses, but there is a host of competitors who, I believe, will start to gain ground. If that happens, it will be difficult for the company to continue growing at the same pace.
And, quite frankly, xAI is a cash incinerator at this point, and I’ve not seen anything to convince me that will change meaningfully in the long term, despite the Anthropic deal.
