What Exactly is Going On?
More than 20 years after founding SpaceX, Elon Musk is planning to take his space company public. This move, potentially happening as early as next year, has captured attention and raised questions.
- SpaceX belongs to Elon Musk, who is also the director of Tesla, Neuralink, and various investment funds.
- Alphabet Inc., the parent company of Google, is among SpaceX’s investors.
- Going public would attract a more diverse range of investors, including individuals, and allow current shareholders to sell their stakes more easily, potentially reaping significant profits.
- SpaceX stands to gain from this IPO, as public markets are broader than private ones, according to Matthew Kennedy of Renaissance Capital.
- The potential fundraising could exceed $30 billion, a record-breaking amount for such an operation and far surpassing the $10 billion SpaceX has raised since its inception, as per Pitchbook.
Why So Much Money?
This IPO coincides with the booming space sector. The industry, valued at $630 billion in 2023, is projected to triple by 2035, according to McKinsey and the World Economic Forum.
SpaceX dominates the commercial launch market with its reusable rockets and owns the largest satellite constellation through Starlink, giving it a unique appeal.
“It’s somewhat of a strange bird, so it’s hard to draw many parallels with the broader space economy,” Clayton Swope from CSIS tells AFP.
Why Now?
Everyone is wondering why Musk, who previously dismissed this option, is now considering taking SpaceX public.
Since its founding in 2002, SpaceX holds a special place for Musk as it aims to fulfill his personal ambition of colonizing Mars.
This audacious goal is central to the company’s priorities, which are developing Starship, the largest rocket ever conceived for lunar and Martian travel, and planning to build space-based AI data centers.
This set of projects could benefit from the additional liquidity that a public listing would bring.
“I believe this could slightly slow down SpaceX in the short term,” explains Mason Peck, a Cornell University aeronautics professor.
SpaceX’s risk-taking strategy, which often embraces unproven technologies and repeatedly launches prototypes to learn from mistakes, could be affected by new investor expectations. This might push SpaceX towards more conventional technological developments, Peck adds.
What Are the Potential Consequences?
However, this influx of money also comes with a cost, as going public will require SpaceX and Musk to be more transparent, especially about revenue generation, and may subject them to pressure for profitability.
“I think this could slightly hinder SpaceX in the short term,” Peck reiterates.
Clayton Swope, however, believes this shift is unlikely, as such an approach is integral to SpaceX’s DNA, and investors are willing to accept the associated risks.
