According to reports, SpaceX is expected to launch an IPO on June 12 with the stock code SPCX. This will allow ordinary retail investors to purchase shares of the company for the first time. The company hopes to raise about $75 billion through the IPO.
If SpaceX raises the money, it will be the largest IPO in history.
The current IPO fundraising record belongs to Saudi Aramco, which raised $29.4 billion in 2019. SpaceX’s market value is expected to reach about US$1.8 trillion after the IPO. According to this valuation, Elon MuskThe company it leads will rank among the 10 most valuable companies in the world and may even surpass Tesla in market capitalization.
SpaceX valuation growth
According to Motley Fool, many investors still view SpaceX primarily as a rocket company, but Starlink has become its most important financial business.
According to reports, SpaceX’s total revenue last year was approximately $18.7 billion, of which Starlink contributed approximately $11.4 billion. The satellite internet business also earned about $1.2 billion in profit, making it the company’s main profitable segment.
The report notes that Starlink’s revenue has grown nearly 50% over the past year, which is one of the main reasons why investors are increasingly excited about a possible IPO.
Also read: SpaceX IPO reveals the hidden reality of passive investing and index funds
SpaceX’s launch business generated an estimated $4.1 billion in revenue last year. However, despite its dominance in the space launch industry, the unit reportedly lost about $657 million, according to the Motley Fool.
SpaceX is also expanding into artificial intelligence with xAI.
SpaceX Artificial Intelligence Business
xAI is Elon Musk’s AI The company competes with companies such as OpenAI and Anthropic. xAI currently lags behind major competitors in artificial intelligence technology, market share and financial performance.
Its core business had sales of approximately $1.4 billion last year, excluding X’s advertising revenue.
Meanwhile, xAI is reportedly spending around $1 billion a month. The Motley Fool noted that such a large cash burn is a major concern for investors.
The recent deal involving Anthropic could improve xAI’s business prospects. However, it’s unclear how helpful the deal will be in the long run. The report created three possible scenarios to show how much a $5,000 investment in SpaceX would be worth in five years.
Also read: OpenAI files for US IPO: When can ChatGPT makers enter the market? What we know so far
What a $5,000 investment might look like in each scenario
1. SpaceX stock bull run
In the most optimistic scenario, Starlink will continue to grow rapidly while maintaining strong profits. The launch business became more profitable and continued to lead the market. The optimistic case also assumes xAI reduces losses and wins more customers and wider adoption.
In this best-case scenario, SpaceX stock would have an average annual return of 15%. In this case, a $5,000 investment would grow to approximately $8,745 after five years.
Under an optimistic scenario, SpaceX’s total valuation could reach about $3.6 trillion by 2031.
2. Base case return on investment
The Motley Fool’s middle scenario assumes Starlink continues to grow, but at a slower pace. This scenario also assumes that competition in the launch business becomes more intense. The launch segment remains an industry leader but struggles to achieve strong and sustained profitability.
In the base case, the stock has an average annual return of 7%. In this case, the $5,000 investment would grow to approximately $6,554 after five years.
Based on the base case, SpaceX’s valuation will rise to about $2.5 trillion by 2031.
3. Pessimistic outlook for SpaceX
Amid the pessimism, Starlink’s growth has slowed significantly. In a pessimistic scenario, profit margins also weaken. Competitors have made some headway with SpaceX in the launch business. The pessimistic scenario assumes that xAI continues to lose large amounts money There is no clear path to profit.
Under this pessimistic scenario, the stock would decline approximately 15% annually.
After five years, a $5,000 investment will shrink to about $2,638, the report states. In this case, SpaceX’s valuation could drop to around $950 billion by 2031.
After examining all three scenarios, the report noted that the bear market scenario appears to be more realistic than the bull market scenario. The report pointed out that SpaceX’s expected valuation is extremely high, leaving little room for error. According to estimates, a $5,000 investment could be worth $2,638 to $8,745 in five years, depending on how SpaceX, Starlink and xAI perform.
