What will happen with SpaceX IPO?

On Friday, Elon Musk’s company SpaceX is scheduled to begin trading on the Nasdaq stock exchange. This will be a profoundly positive event for both the United States and the investing public. The public offering of SpaceX represents the nation’s renewed commitment to technological innovation, industrial strength, and leadership in the final frontier: outer space.

Since the late 1950s, space exploration has been primarily the responsibility of the federal government. The Apollo moon landings of 1969 and the early 1970s demonstrated what America could achieve when national ambition was matched with resources and the talents of the nation’s best and brightest. But after the moon landings, the U.S. space program gradually lost momentum. The SpaceX offering changes that trajectory. It promises to reignite space exploration but also to demonstrate the economic feasibility of building data centers in orbit.

The company has transformed the economics of space transportation through reusable rockets, dramatically reducing launch costs while increasing reliability. Today, SpaceX is responsible for the majority of U.S. orbital launches. Its Falcon rockets, Starlink satellite network, and Starship program have established America as the clear global leader in commercial space activities. SpaceX has dramatically reduced the cost of transporting people and materials into orbit. Under NASA, historical launch costs averaged roughly $18,500 per kilogram. SpaceX’s Falcon Heavy rocket has reduced that figure to approximately $1,400 per kilogram. The Starship program is designed to lower launch costs even further, potentially by as much as 99% compared with historical averages. SpaceX management believes launch costs can eventually fall to around $200 per kilogram, a threshold that could make orbital data centers economically viable and largely neutralize opposition to the construction of large data centers.

SpaceX is a massive, vertically integrated company composed of three major operations: Orbital Launch Services, Starlink Satellite Communications, and its newest venture, artificial intelligence. Together, these operations create a powerful flywheel effect. The launch division deploys Starlink satellites, which in turn provide the low-latency communications infrastructure necessary to support both terrestrial and orbital AI data centers. The SpaceX business is undeniably impressive. But is the company worth the $1.77 trillion valuation implied by the IPO?

The bullish case rests on four pillars.

First, Starlink could eventually generate revenue comparable to that of the world’s largest telecommunications companies while maintaining significantly higher profit margins because SpaceX owns both its satellite infrastructure and launch capabilities. Second, SpaceX is positioned to dominate the global launch market. Third, the company aims to become an AI hyperscaler, operating its own AI models and data centers on Earth and eventually in space. Fourth, there is the Musk premium.

The Wall Street banks bringing SpaceX to the public markets project extraordinary growth. Last year, the company reported revenue of $18.7 billion. Goldman Sachs, the lead underwriter, projects SpaceX revenue will reach $474 billion by 2030. That would represent an astonishing rate of expansion. Morgan Stanley, another lead bank, forecasts revenue of $3.4 trillion by 2040 and more than $2.7 trillion in annual cash flow. But how will SpaceX trade on June 12 and in the days that follow?

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Based on my previous experience running an institutional sales desk at JPMorgan, my view is that demand for the offering will be extremely strong. The stock is likely to begin trading well above its $135 offering price. In the weeks that follow, however, I expect the shares to drift lower, potentially falling below the initial offering price as early enthusiasm fades.

Over the longer term, SpaceX could become a worthwhile investment. Musk has repeatedly accomplished what critics said was impossible. If he can execute on even a portion of his vision, SpaceX may prove to be one of the most consequential companies of this century.

James Rogan is a former U.S. diplomat who later worked in law and finance for over 30 years. He writes a daily email note on markets, economics, politics, and social issues. He can be reached at his email: roganjames8202@gmail.com.