By Akash Sriram<\/p>\n
May 21 (Reuters) – Investors buying into SpaceX’s nearly $2 trillion IPO are making a high-stakes wager that CEO Elon Musk can turn a fast-growing satellite business into something far bigger, using an unproven rocket to unlock an ambitious push into AI.<\/p>\n
Musk has grown SpaceX into the world’s largest rocket business \u200cby launching thousands of Starlink internet satellites and pioneering reusable rockets that have transformed the economics of space.<\/p>\n
But the company is seeking to be valued not just on \u200cthose laurels but on the juggernaut it might become if Musk’s ambitious bets to colonize Mars, put data centers in space and become a leading AI company pay off.<\/p>\n
At the heart of those bets is an assumption that \u200ba set of events will unfold in the right order, with each step unlocking the next level of funding and expansion: Starlink will generate the cash to bankroll the next-generation Starship rocket, Starship will slash launch costs to expand the market, and that expanded market will ultimately support the new AI business, currently a money guzzler.<\/p>\n
“The risk isn’t whether SpaceX is a real business; it clearly is,” said Josh Gilbert, analyst at eToro, a trading platform where the stock will be available on the day of debut.<\/p>\n
“The risk is whether a $1.75 trillion valuation adequately prices in the execution \u200cchallenges that come with being part rocket company, part internet provider, \u2060part AI venture, and very much driven by the vision of one individual.”<\/p>\n
SpaceX is testing investor patience with huge losses it disclosed in its initial S-1 IPO filing on Wednesday: $4.28 billion in the three months ended March 31, an eightfold increase from a year earlier.<\/p>\n
Those losses alone will \u2060force investors to rely less on traditional metrics to value SpaceX, and more on the belief that Musk will execute what he has pledged.<\/p>\n
IN MUSK INVESTORS TRUST<\/p>\n
From building a trillion-dollar EV company that helped drive a global shift to clean cars to leading SpaceX as the first private firm to fly NASA astronauts, Musk has repeatedly turned high-risk engineering bets into dominant businesses, fueling investor belief that even his \u200bmost \u200bambitious SpaceX assumptions may prove achievable.<\/p>\n
“You are not going to justify a $1.75 trillion or $2 trillion valuation for \u200bSpaceX using traditional fundamental metrics alone,” Rainmaker Securities cofounder Greg Martin said \u200con a video call. “Many investors … believe SpaceX could become a $5 trillion to $10 trillion company over time.”<\/p>\n
Story continues <\/p>\n