Elon Musk has done it again. This time, it is not a rocket landing on a drone ship, but a financial one: a listing of SpaceX on the London Stock Exchange. The move, confirmed this morning, is a high-stakes gamble on the City’s ability to attract and retain deep-pocketed investors. For a man who has repeatedly criticised regulatory overreach, the choice of London over New York or Hong Kong is a curious one. But then again, Musk has never been one for conventional wisdom.
The prospectus, a dense 500-page document, reveals a company that burns through cash at a rate that would make a government blush. Yet the market capitalisation sought is north of $50 billion. This is a bet on future revenues from Starlink and Starship. It is a bet that British pension funds and sovereign wealth funds will overlook the lack of profits in favour of a vision of interplanetary commerce. I, for one, remain sceptical.
Consider the backdrop. The Bank of England is wrestling with inflation that refuses to die. Gilt yields have been on a rollercoaster, and the pound is wobbly. Capital flight has been a persistent headache for the Treasury. Into this maelstrom steps Musk, demanding billions. The timing could not be more audacious.
Yet there is a method to the madness. London’s regulatory environment, post-Brexit, is more accommodating than Brussels or Washington. The Financial Conduct Authority has signalled a willingness to relax rules on dual-class share structures, a boon for founder-controlled companies. Musk, who values control above all else, will have noted this. Moreover, the UK’s tax regime for capital gains, while not as generous as Singapore’s, is friendlier than in many other European capitals.
The question is whether the British investor appetite for risk matches Musk’s ambition. The days when the City would throw money at any IPO are long gone. The collapse of high-profile floats such as Deliveroo and THG has left scars. Institutional investors are more cautious, demanding a clear path to profitability. SpaceX offers no such path. Its financial statements are a testament to ambition over discipline. Revenues from Starlink are growing, but so are the costs of launching thousands of satellites. Starship, the next-generation rocket, has yet to turn a profit.
Musk’s response to such concerns is classic: he paints a picture of a future where humanity is a multi-planetary species, and where early investors will be rewarded beyond their wildest dreams. It is a compelling narrative, but it ignores the hard realities of compound interest and opportunity cost. The money poured into SpaceX could be deployed elsewhere, in sectors that generate real returns today.
For the UK, the float is a signal. It says that London is still a global financial centre, capable of attracting the world’s most innovative companies. But it also carries risks. A failure of the stock to perform would be a black eye for the LSE, and could embolden those who argue that the City has lost its edge. The Treasury is watching closely: a successful float would boost tax revenues and enhance London’s reputation; a flop would be a propaganda victory for rivals in Dubai and Singapore.
Investors must weigh the allure of Musk’s vision against the discipline of a balance sheet that shows net losses year after year. This is a bet on the man, not the numbers. And as we have seen with Tesla, betting on Elon can be extraordinarily profitable, but also nerve-wracking. The volatility in Tesla shares is a testament to that.
In the end, the SpaceX float is a grand experiment. It tests whether the British market has the stomach for a story that has yet to be written. As a financial editor, I prefer stories that come with audited accounts and a proven business model. But I also recognise that the markets are, at their core, a theatre of dreams. Musk is offering a dream of a future among the stars. Whether the City will buy it, at this price, remains to be seen. One thing is certain: it will be a wild ride.
