SpaceX's stock‑market blast‑off could be Musk's biggest gamble yet

The launch that started it all

It's 07:25 am, 13 October 2024, at Starbase, near Boca Chica on the Texas side of the US/Mexico border. On the launch pad stands the biggest rocket ever made. Its engines fire and it climbs into the skies over the Gulf of Mexico to cheers and screams in the SpaceX control room.

But the launch is not the main event. What goes up must come down — and how it comes down will become a milestone in space exploration. Seven minutes later, the massive rocket booster starts falling back to Earth. Its engines reignite and it slows its descent with pinpoint precision, captured by a clasp called Mechazilla, or "the chopsticks", by engineers.

Amid the whoops and high-fives, Elon Musk tells his followers that this is a "big step towards making life multiplanetary" — a reusable rocket that will slash the costs of launching things into orbit, to the Moon, and one day to Mars.

What are investors actually buying?

On 12 June, trading begins in a chunk of shares in a company that, until now, only Musk and a select group of wealthy private institutions have been able to own. UK stockbrokers have reported a surge in interest, with some calling it "a first foray into investing" for many retail customers.

The bankers selling the shares have set a target valuation of $1.75 trillion — placing SpaceX comfortably in the top 10 most valuable companies on Earth. That is a staggering number for a company that lost nearly $5 billion last year.

SpaceX is in fact several businesses in one. It designs rockets, manufactures and launches its own and other companies' satellites, and operates the Starlink communications network — which has proven geopolitically critical during Ukraine's defence against Russia's invasion.

Yet even the most optimistic estimates value the rockets-and-Starlink business at around $300 billion — less than 20% of that $1.75 trillion target valuation.

The real bet: Artificial Intelligence

Bundled into SpaceX is Elon Musk's AI company xAI, along with a deeper space programme that plans to create data centres in orbit — powered by the sun, cooled by the chill of space — while building human-crewed bases on the Moon and eventually Mars.

Of the $28.5 trillion total addressable market SpaceX has identified, $26.5 trillion sits in AI. To believe that figure, you need to believe the AI industry will be comparable in size to the entire US economy — or all of Europe.

Analyst Sinead O'Sullivan is unconvinced. "The logo, the brand is built on two decades of rocketry, but most of the capital expenditure is actually on data centres and an AI company that seems to be more about social media than anything to do with space. You're buying a share of the Elon Musk brand more than any kind of space industry."

Ownership without control

Musk is listed as founder, chief executive, chief technical officer, and chairman of the board. Even though he owns only 42% of the company, his shares carry extra voting rights — giving him effective control of 85% of votes.

Financial journalist Robert Armstrong asks: "What is holding shares in a company? It's ownership — but what kind of ownership is this? Do you really own something you can't control? I want to pay less for a company where my ownership does not include control."

And that control sits with a man who has used his power controversially: spending nearly $300 million on Donald Trump's re-election campaign, securing billions in US government contracts, and intervening in the internal politics of several nation states.

Track record: the bull case

Nevertheless, Musk's critics have been wrong before. He took on the combined might of the global car industry, and within 20 years his carmaker Tesla was worth more than Toyota, Ford, General Motors, and Volkswagen combined. Since 2020, estimates of SpaceX's value have risen from $40 billion to $1.75 trillion — a more than 40-fold increase — while Tesla shares have risen tenfold over the same period.

FOMO — the fear of missing out — is a powerful emotion when it comes to Musk. Tesla naysayers were proved wrong and missed huge gains. One big investor told the BBC he is "more P.T. Barnum than Rockefeller or Buffett," yet Musk keeps delivering on seemingly impossible ambitions.

Another dot-com boom?

The SpaceX IPO is the biggest share sale of its type in history — but it is just the first of a wave of mega-sales from companies at the frontier of the AI economy. SpaceX is selling only 5% ($75 billion) of total shares at first, with competitors Anthropic and OpenAI expected to similarly test public markets.

Once a portion has been sold, more can follow — potentially trillions of dollars worth of new shares coming to market over the coming years. Some worry this could create a supply glut that demand may struggle to absorb, echoing the dot-com bust of the early 2000s.

One key difference: the explosion of index funds that automatically buy shares in stock-market-listed companies may help absorb some of that supply — providing a floor that did not exist in 2000. Anthropic and OpenAI will join SpaceX at the US mega-corp top table, exerting unprecedented power and influence across the globe.

And so, all eyes are again on the SpaceX launch pad — for the most significant share sale in stock market history.