SpaceX is going public, and it can already be said that this will be 1 of the most crucial developments in the past of the capital market. We're talking about Elona Muska, who wants to rise about $75 billion, at a valuation close to $1.75-1.8 trillion. By comparison, Saudi Aramco raised around $30 billion in public offerings in 2019. SpaceX wants to beat this score more than twice. And here is the most crucial question: should an investor participate in specified an IPO?
On the 1 hand, we have the world's most advanced space company, a company that has changed the rocket launch market, built Starlink and operates in areas that can be highly crucial for decades to come. On the another hand, we have a very advanced valuation, immense expectations, low free float, advanced volatility and business, in which a large part of the value is based not on the current results, but on the imagination of the future. As we know, Elon Musk's visions can change the world, but not all imagination can be bought at any price.
What is SpaceX really?
At first glance SpaceX is associated with rockets. And right, due to the fact that that's what made the company a rocket company. ]]>one of the most crucial technology companies in the world]]>.
SpaceX cooperates with NASA, implements space flights, takes cargo into orbit and develops technology that most competitors simply cannot copy today. It's a company that changed the economy of space flights and showed that rockets can be utilized multiple times.
But tonight SpaceX is not just rockets.
Source: Own development
The first section is of course space activity. The second is Starlink, a network of satellites providing net access. The 3rd is xAI, i.e. artificial intelligence, Grok and data center infrastructure.
And this division is crucial, due to the fact that erstwhile an investor buys SpaceX, he doesn't just buy a rocket company anymore. He buys a combination of space, satellite net and artificial intelligence.
That sounds very attractive. The question is how much is worth paying for this?
Starlink, the most crucial origin of revenue
The most profitable and most crucial section of SpaceX is Starlink today.
Source: x.com/Starlink
We are talking about a network of thousands of satellites that supply high-speed net access in places where classical infrastructure is weak, costly or not at all. This is very crucial due to the fact that a immense part of the planet is inactive out of scope of good broadband.
And here Starlink has a real advantage.
You don't gotta dig miles of fibre optics. No request to build a classical landline. Just a terminal, access to the sky and satellite infrastructure that SpaceX has been developing for years.
This is simply a business that can have a immense market. Especially if access prices are gradually falling and the number of customers is increasing. The cheaper the service, the more possible coverage. And the bigger the scale, the better the economy of the full segment.
And that is why Starlink is present the most crucial part of SpaceX from the investor's point of view. Not rockets. Not Mars. Not visions of space colonization. Only the satellite internet, which already generates crucial revenue.
xAI, or artificial intelligence attached to IPO
The 3rd section is xAI, or artificial intelligence activity.
We are talking about Grok, a model that competes with solutions like ChatGPT or Gemini, as well as data centres and infrastructure needed to make artificial intelligence.
Source: buzzcenter.pl
This section is very fashionable, very medial and very expensive.
]]>Maintenance of AI infrastructure costs billions of dollars a year]]>. Data centres, graphics, energy, investigation teams, model improvement – all of this requires immense capital. And that's why joining xAI to SpaceX looks like a decision that's expected to increase the scale of the full communicative told to investors before going public.
Because a space company would be interesting.
The Starlink Space Company would be even more interesting.
But a space company with Starlink and artificial intelligence? That already sounds like a perfect communicative for a immense IPO.
The problem is that the marketplace very frequently pays not for what the company actually earns today, but for what it can gain for many years. And at times like this, it's very easy to overdo it.
$19 billion in gross and an estimation of nearly 1.8 trillion
SpaceX presently generates little than $19 billion in revenue. About 60% are to come from Starlink, 22% from the space segment, and the remaining 18% from xAI.
The problem is that with specified a gross scale the company is to be valued at about $1.8 trillion.
This means a price-to-income ratio around 100.
Source: Own development
By comparison, for very costly and fashionable technology companies, this rate is frequently lower. Palantir, Tesla or OpenAI are besides valued high, but SpaceX at this price enters a completely different level of expectations.
And here we should be clear: erstwhile investing in SpaceX at specified a valuation, the investor does not buy the current results. He's buying a vision. He buys religion that Elon Musk is one more time right and convinced that Starlink will become a giant business, space flights will become increasingly profitable, and artificial intelligence added to the full structure will justify astronomical valuation.
Is that possible? Yeah.
Is that certain? Definitely not.
SpaceX is simply a large company. But a large company can be besides costly too.
Continue reading: ]]>SpaceX is going public! Buy or run?]]>
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Author: ]]>Karol Natonik]]>
