The City is watching Elon Musk’s latest gamble with a mixture of awe and dread. SpaceX, the private rocket company that has long been the jewel in Musk’s crown, is now reportedly courting a public listing. The buzz is deafening. Analysts are slapping astronomical valuations on the firm, some north of $150 billion. But for those of us who remember the dot-com bubble and the more recent SPAC frenzy, this feels less like a moonshot and more like a margin call waiting to happen.
Let’s talk about the numbers. SpaceX’s revenue, driven largely by Starlink subscriptions and government contracts, is real but hardly justifies the multiples being floated. We are looking at a company that, for all its engineering prowess, is still burning cash at a prodigious rate. The Starlink constellation, while impressive, faces competition from terrestrial broadband and other low-earth orbit networks. The Starship project, meanwhile, is a capital sink that could swallow billions before it sees a return.
Now, throw in the public markets. A listing would expose SpaceX to the whims of retail traders and institutional investors who have been conditioned to treat Musk’s ventures as casino chips. The volatility will be savage. One tweet from Musk about dogecoin or a regulatory hiccup from the FAA could send the stock into a tailspin. And with Musk’s personal wealth already leveraged against Tesla shares, a sharp drop in SpaceX’s valuation could trigger a spiral that makes the 2022 crypto crash look like a rounding error.
The fiscal irrationality is staggering. We have a company that has never turned a profit, that burns cash faster than a Raptor engine, and that is valued as if it has already colonised Mars. The market is pricing in perfection. Any delay, any misstep, and the correction will be brutal.
Central bankers, meanwhile, are tightening just as this speculative froth builds. The era of cheap money is over. Real interest rates are rising. Capital flight from risky assets has already begun. The tech-heavy NASDAQ is down 15% from its highs. Yet here we are, preparing to float a cash-hungry rocket company into a tightening liquidity environment. It defies logic.
The comparisons to Tesla are instructive. When Tesla went public in 2010, it was a niche electric car maker. It took years of execution and a massive equity raise to reach profitability. SpaceX is far more capital intensive. The Starship programme alone could require $10 billion before it becomes operational. Where will that money come from? A public offering would dilute existing shareholders. Debt? The bond markets are already jittery.
Musk is a visionary, no doubt. But being a visionary is not a hedge against insolvency. The City’s analysts are right to be sceptical. This surge is not a sign of strength; it is a signal of exuberance. And in markets, exuberance is the greatest risk of all.
So, what should investors do? Watch from the sidelines. Let the fundamentals catch up with the hype. If SpaceX can deliver on its promises, the stock will still be there in five years. But if it becomes another cautionary tale of a private company that should have stayed private, those who pile in now will be left holding the bag. The bottom line is simple: the cost of capital is rising, and SpaceX’s rocket ship is running on fumes of speculation.
