Mark your calendars, because the most anticipated public listing since Facebook is finally arriving. SpaceX, Elon Musk’s privately held rocket behemoth, is rumoured to be preparing a market debut that could value the company at over $1 trillion. For UK investors starved of high-growth opportunities in a stagnant domestic market, this is the equivalent of a full-throttle launch. But before you pile in, there are three things you need to know.
First, the valuation. At $1 trillion, SpaceX would be priced at roughly 300 times its current annual revenue. That’s not cheap by any metric. Even for a company that has essentially cornered the reusable rocket market and operates the Starlink satellite constellation, the multiples are eye-watering. Remember the dot-com bubble? Pets.com had a similar story. The difference is that SpaceX has actual hard assets and a monopoly on cost-effective launch. But the market is already pricing in a decade of flawless execution. One failed mission or regulatory hiccup could send the stock into a tailspin.
Second, the capital flight risk. British institutional investors have been increasingly pulling money out of London-listed equities in favour of US tech giants. The FTSE 100 is a graveyard of old economy stocks: banks, miners, and oil companies. A SpaceX listing would accelerate that trend, as UK fund managers scramble to allocate a slice of their portfolios to Musk’s moonshot. That means further pressure on the pound and gilt yields, as sterling-denominated assets lose their allure. The Bank of England will not be amused, but there is little they can do against a tidal wave of global capital chasing the next big thing.
Third, the regulatory and political landscape. The UK government, desperate to keep London relevant as a financial hub, has been courting Musk to list here. But so far, he has shown no interest, preferring New York or perhaps a dual listing. If SpaceX chooses the US, UK investors will have to buy American depositary receipts, which come with currency risk and higher fees. The Financial Conduct Authority has also signalled that it might relax listing rules for such a high-profile company, putting minority investors at a disadvantage. Remember, Musk is no fan of corporate governance norms. He controls Tesla with an iron grip, and SpaceX will be no different.
So what should a prudent UK investor do? The temptation is to go all in on the trillion-dollar dream. But the bottom line is this: SpaceX is a remarkable engineering feat, but it is also a high-risk speculative play. If you have a high tolerance for volatility and a long time horizon, allocate a small portion of your portfolio. But do not expect the same returns as Tesla’s early days. The easy money has likely already been made by private investors. For the rest of us, it is a gamble on whether Musk can turn sci-fi into a sustainable business.
The market waits for no one. But in the City, we know that a rocket can also burn up on re-entry. Caveat emptor.
