SpaceX’s $1.78tn IPO asks investors to buy Musk’s moonshots

{"text":[[{"start":10.2,"text":"As much as $1tn of the value of SpaceX’s initial public offering is based on a series of ambitious “moonshot” goals that investors must bet will be achieved to justify Elon Musk’s lofty price tag. "}],[{"start":24.299999999999997,"text":"According to people involved in the record $1.78tn offering, investor presentations and research circulated ahead of the IPO, much of the valuation rests on assumptions that SpaceX can reach Mars with reusable rockets, put data centres into orbit and play a key role in developing AI."}],[{"start":44.949999999999996,"text":"Investors are also assuming that SpaceX can drive home its existing advantages by making Starlink the dominant communications network and its reusable rockets will help create new markets outside Earth."}],[{"start":58.55,"text":"Ahead of Friday’s IPO, some existing investors in the company, which has soared in value from $400bn less than a year ago, have questioned the massive valuation, at which the lossmaking company would trade at 92 times last year’s revenue, a multiple that far outstrips that of other Big Tech companies. "}],[{"start":78.35,"text":"One venture capitalist with a multibillion-dollar stake in SpaceX said: “Everyone understands that valuation will always require some forward-looking perspective on what that business will become down the road. I think the business could be worth $1tn or so, without the orbital data centre piece.”"}],[{"start":null,"text":"

"}],[{"start":96.75,"text":"Analysts at Morningstar said that if SpaceX achieved its moonshots, its target price would be justified, but on the basis of its current performance SpaceX was worth just $780bn."}],[{"start":109.7,"text":"Nicolas Owens, a Morningstar equity analyst, added that SpaceX’s listing was “boosted by almost every investment bank on the planet, buoyant investor appetite for AI infrastructure bids” and early inclusion on the Nasdaq. "}],[{"start":122.4,"text":"However, others are more bullish, pointing to the company’s massive lead in rocket-making, Musk’s technical record and the untapped market opportunity in AI."}],[{"start":131.85,"text":"Some bulls, particularly Silicon Valley investors who have benefited from striking deals across Musk’s corporate empire, have tens of billions of dollars riding on the outcome. "}],[{"start":142.9,"text":"Goldman Sachs projects SpaceX’s AI revenues will surge 100 times to $322bn by 2030, while Morgan Stanley envisions the company’s revenue hitting $3.4tn by 2040. Both banks are underwriting the IPO. "}],[{"start":159.8,"text":"SpaceX is in effect three interlocking businesses: developing and launching rockets, providing satellite internet via Starlink and building AI models and the computing infrastructure to train and run them. "}],[{"start":null,"text":""}],[{"start":171.35000000000002,"text":"“Never bet against Elon Musk, the guy has repeatedly done it again and again and again in multiple businesses,” said David Anderman, an investor in space companies who served as SpaceX’s general counsel."}],[{"start":182.75000000000003,"text":"When Anderman joined the company, Musk told him about Starlink: a plan to provide internet access worldwide via low-cost satellites. The entrepreneur told his new general counsel “to generate $200bn in value so we can go to Mars”, recalls Anderman. "}],[{"start":198.80000000000004,"text":"“At the time I joined, the valuation of SpaceX was $32bn,” he said. “It sounded somewhat outlandish that just this Starlink thing that nobody had ever heard of, that hadn’t even launched yet, was going to be somehow worth $200bn. And guess what? That’s now worth $1tn all by itself.”"}],[{"start":null,"text":""}],[{"start":219.35000000000005,"text":"Musk now argues that dominance in rocket launching, boosted by recent setbacks for Jeff Bezos’s rival group Blue Origin, and satellites puts his company in pole position to dominate the space economy, including harnessing the power of the sun for orbital data centres. "}],[{"start":236.60000000000005,"text":"“There has never been a company with a bigger moat . . . You literally have to build rockets and figure out how to put them into space and then make them reusable to come anywhere close,” said Charles Roberts, chief investment strategist at Ark Ventures, part of Cathie Wood’s investment group."}],[{"start":253.35000000000005,"text":"“Conservatively [SpaceX] have a 10-year lead on any realistic competition,” said Roberts, whose fund holds more than $100mn in SpaceX stock. "}],[{"start":262.65000000000003,"text":"The company is hoping to leverage its position to become the dominant provider of computing power, either to develop its own leading AI models or lease its data centres to rivals. "}],[{"start":273.90000000000003,"text":"Recent deals to lease computing capacity to Anthropic and Google for a combined $24bn a year underscore the value of SpaceX’s existing terrestrial infrastructure. "}],[{"start":286.3,"text":"Satellite-based data centres, which are technically feasible but costly, could massively expand a lucrative market leasing computing power to other AI groups. "}],[{"start":296.3,"text":"“If you look far enough out there are some incredibly large numbers . . . it comes down to how SpaceX executes, over what timeline and what discount rate you apply,” said one investor with a multibillion-dollar stake in the company. "}],[{"start":311.35,"text":"Many are likely to be compelled by their attitudes towards Musk himself. The 54-year-old’s reputation for pushing technical boundaries has won him a devoted following among retail investors, who have buoyed the valuation of his public carmaker Tesla, and venture capitalists who have repeatedly backed the multibillionaire’s many start-ups. "}],[{"start":330.15000000000003,"text":"If each of the company’s “moonshot” bets paid out, its current valuation was “achievable,” said Morningstar’s Owens. “Just know that, if that is what you’re buying, you’re paying for a possible but not nearly entirely likely scenario.”"}],[{"start":353.3,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780988008_8625.mp3"}