Don't Fear Missing Out on Today's SpaceX Stock IPO
ELON MUSK famously took a chainsaw to government waste. Will SpaceX do the same to investors' wealth?
By Brett Arends
Say what you like about Elon Musk, but you have to give him credit for his vision and his chutzpah.
The self-appointed technoking, last year’s supposed U.S. budget czar, is the talk of the town thanks to his forthcoming Space Exploration Technologies — aka SpaceX — IPO. That initial public offering, expected to raise around $80 billion in cash, is set to take place this week and is expected to be the biggest in history — exceeding even the 2019 listing of Aramco Saudi Arabia’s national oil company.
The best place to hide needles? A haystack.
Hardly anyone is going to read the full SpaceX listing prospectus — which may be lucky for the company. As it’s around 300 pages long, including innumerable repetitions, you may ask whether the length, and density, is a bug or a feature. The best place to hide needles is in a haystack.
If your broker is offering you stock in this IPO, and you are wondering whether to participate, here are the things you should know about that Wall Street isn’t that anxious to tell you.
Wall Street banks are going to pocket $500 million in fees from this IPO. That is, observers say, surprisingly low given the offering’s scale. But that shows how keen the bankers are to get their snouts in the trough of Musk’s future equity sales.
With that amount of money at stake, it is no surprise that Wall Street and its useful idiots in the media are pushing this stock as hard as it can be pushed.
In case you missed it, jumbo Wall Street bank JPMorgan had a stock analyst covering Musk’s other publicly traded company, Tesla who was resolutely bearish. By an absolutely amazing coincidence, JPMorgan a month ago suddenly reallocated that analyst. His replacement initiated coverage of Tesla with a target price more than three times as high. And Musk cut JPMorgan in on the IPO. JPMorgan declined to comment.
Nothing to see here, folks. Move along.
SpaceX is a financial black hole. The company is losing money with no end in sight.
“We have a history of net losses and may not achieve profitability in the future,” the prospectus says. The company lost $4.6 billion in 2023, $4.9 billion in 2025, and $4.3 billion in the first three months of this year — equivalent to $2 million per hour. In total, SpaceX has lost $41 billion so far. Capital expenditures and costs will rise in the future, it warns.
Starlink: the only money maker in the bunch
Right now, SpaceX as a business is simply a mobile network, Starlink, that uses satellites. The Starlink division generates 70 percent of all revenues and far more than 100 percent of all net income, given that the rest of the company loses money. Starlink currently has 10.3 million customers and generated $3.3 billion in revenue in the first quarter. For comparison, the three main U.S. terrestrial mobile networks, Verizon T Mobile and AT&T had in total 40 times as many customers and 30 times as much revenue. Meanwhile their aggregate market values add up to less than one-third of the SpaceX IPO valuation.
On the upside, Starlink can be accessed while you’re on a plane or on a boat on the high seas.
How do you ask $1.8 trillion for a mobile operator with 10 million customers? By promising trillions in future profits from other, completely unproven, businesses. In the case of SpaceX, the big promise relates to artificial intelligence. AI applications, including business and consumer demand, supposedly represent $26.5 trillion, or 93 percent, of the alleged “total addressable market” that SpaceX is chasing.
Why would Musk’s Grok AI platform be better than Anthropic’s Claude, or OpenAI’s Chat GPT, or Alphabet unit Google’s Gemini? The SpaceX prospectus claims a number of advantages, including the alleged cost advantage of running solar-powered data farms in space. We shall see.
Meanwhile it also names, as an actual competitive advantage, “Grok’s deep integration with X,” the former Twitter, purchased by Musk in 2022. “This direct, real-time access to the information and human discourse on X enhances Grok’s truth-seeking capabilities by grounding outputs in up-to-date knowledge and diverse viewpoints,” the prospectus says. Yep, Twitter is given as a source for “truth.”
Whether the lawyers were laughing when they typed this is known only to them. But I’ll take the over.
Meanwhile, as of March 31, Grok and Twitter had allegedly 1.3 billion global users. Less than half were active. The total number of paying subscribers? Er... 6.3 million, including 4.4 million who are paying for X and 1.9 million who are paying for Grok. Booyah!
Who wants to lose a million?
The rest of the company’s dreams are more moonshine than moon landings. Future business plans, the company says, include “the establishment of a lunar economy and interplanetary industrialization…space tourism and cargo transport to the Moon ... in-orbit manufacturing, passenger transport to the Moon, passenger and cargo transport to Mars, energy production on the Moon and Mars, manufacturing capabilities on the Moon and Mars, and asteroid mining.”
Many of these “initiatives” or dreams, the company admits, “involve significant technical complexity, unproven technologies, or technologies that do not exist or may require significant advancement, and such initiatives may not achieve commercial viability.” In other words, the company plans to target markets that may not even exist using technologies it does not have.
This is, at least, an advance over the infamous IPO during the South Sea Bubble of 1720, when, according to historian Charles Mackay, a clever stock operator managed to raise money for “a company for carrying on an undertaking of great advantage, but nobody to know what it is.” Shrewdly, Mackay wrote, the stock operator in that case pocketed the cash and fled the country the next day.
Rounding out the goodies in the SpaceX prospectus is the news that Musk will retain 82.4 percent of the votes through his control of the Class B voting stock, and will singlehandedly pick a majority of the board. Oh, and while Wall Street is claiming the stock is worth $135 a share, as recently as last October it was being valued internally at $42. Are you being ripped off — or has the company’s value tripled in the past eight months? You make the call.
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