SpaceX's Starship milestone fuels speculation over a looming IPO and Musk's power

It is 07:25 am on 13 October 2024 at Starbase near Boca Chica on the Texas side of the US/Mexico border. The biggest rocket ever made fires its engines and climbs into the skies over the Gulf of Mexico to cheers and screams in the SpaceX control room.

But the launch is not the main event. Seven minutes later, the massive rocket booster starts falling back to Earth. Its engines reignite as planned, it slows its descent and guides itself with pinpoint precision so it can be captured by Mechazilla, or "the chopsticks". Engineers have achieved something that has never been done before.

Elon Musk tells his social media followers that this is a "big step towards making life multiplanetary". He says a reusable rocket will slash the cost of launching things into orbit, to the Moon and one day to Mars.

SpaceX and Musk are compared with Tony Stark and Stark Industries. But the article says the launch is only part of the story, because on 12 June trading will begin in a chunk of SpaceX shares.

UK retail investors are likely to be allocated around £1.5bn worth of shares. Simon Belsham, Chief Client Officer at Hargreaves Lansdown, says: "While we recognise this IPO might not be right for everyone, it's an exciting moment for many of our clients. We're expecting this might be a first foray into investing for many."

The article says that if someone has retirement savings invested in shares, they are likely to become a part-owner of SpaceX even if they do not apply directly. It says the company sits at the crossroads between technology and geopolitics and, as Musk would have it, the future of the human race.

The chance for normal Earthlings to buy shares in SpaceX is described as one of the most important moments in the history of stock markets. The article says it will almost certainly make Elon Musk the world's first ever trillionaire.

The prospectus says the mission is "To build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe and to extend the light of consciousness to the stars."

The article argues that SpaceX is not mainly about rockets, but about the future of artificial intelligence. It says the success or failure of the partial sale to the public is an important test of investor optimism about AI.

It says the concentration of power in a few US mega-corps raises questions about how business, economics and politics work on Earth. Sinead O'Sullivan calls it "an Elon Musk ego project".

The bankers selling the shares have put a target price tag of $1.75trn on SpaceX, placing it in the top 10 most valuable companies on Earth. The article says that is a staggering valuation for a company that lost nearly $5bn last year.

SpaceX is described as several businesses in one company: it designs rockets and manufactures and launches its own and other people's satellites. Its own satellites form the basis of Starlink, which the article says has proven crucial geopolitical importance during Ukraine's defence against the Russian invasion.

The article says Starlink is profitable and generates significant income, but that even optimistic estimates value this part of SpaceX at around $300bn, less than 20% of the target valuation.

The article says the real bet is on AI because SpaceX includes xAI and a deeper space programme with plans for data centres in space and human-crewed bases on the Moon and eventually Mars. It says $26.5trn of the $28.5trn total addressable market identified by SpaceX is in AI.

O'Sullivan says it is unclear what business or industry SpaceX is even in, and argues that the company is a conglomeration under Elon Musk's name. She says investors are buying a share of the Elon Musk brand more than any space industry.

The article also raises the question of ownership without control. Musk is listed as founder, chief executive, chief technical officer and chairman of the board. Even though he only owns 42% of the company, his shares come with extra voting rights meaning he effectively controls 85% of the company.

Robert Armstrong says investors should get a discount for giving up control. An institutional investor says the cult of Elon Musk requires disciples to pay a premium for having no real say in how the company is run.

The article says Musk has used his power and wealth controversially, including spending nearly $300m on Donald Trump's second run for office, securing billions in US government contracts, and supporting right-wing figures in the UK and elsewhere.

It says betting against Musk has not been wise in the past. Since 2020, SpaceX's estimated value has risen from $40bn to $1.75trn, and Tesla shares have risen tenfold even as Tesla's car production has plateaued.

The article says Musk justifies valuation shifts by dangling new targets, including a promise to pivot towards robotics with a target to build one billion humanoid robots. One investor says he is more P.T. Barnum than Rockefeller or Buffett.

The article warns that FOMO may drive investors to buy into SpaceX just as Tesla naysayers once missed huge gains. It says the SpaceX IPO is the biggest sale of its type in history and may be the first of several mega-sales of AI frontier companies.

It warns that a flood of new shares could create a glut of supply that demand may struggle to absorb, potentially pushing prices down. It says index funds may help soak up some of that supply.

The article ends by saying Anthropic and OpenAI may join SpaceX at the top table of US mega-corps, exerting unprecedented power and influence across the globe. It says all eyes are on the SpaceX launch pad for the most significant share sale in stock market history.