Good morning. How much faith do you put in Elon Musk? If you can’t wait to get a piece of SpaceX after studying its prospectus, the answer is, a lot. Musk’s rocket-and-satellite company filed its S-1 yesterday, giving us a detailed look at the financials behind what’s expected to be the biggest initial public offering in history.
In some ways, this is the stuff of speculative fiction: a bold plea for capital to conquer new worlds, a dream for one man to net the largest pay package ever handed out on earth if he manages to establish a permanent colony of at least 1 million people on Mars. (See page 236.) Though he might try, they can’t all be named Musk. And before SpaceX can plant a flag on other planets, it may need to address some red flags here at home. Among them:
Revenue. SpaceX expects to raise up to $75–80 billion at a valuation of $1.5 trillion or more. Saudi Aramco raised $29.4 billion at roughly the same valuation in 2019. The difference is that it made a profit of $21.3 billion on $71 billion in revenue in the quarter prior to filing while SpaceX lost $1.3 billion on $4.7 billion in revenue last quarter. And the source of that revenue is mixed, with the Starlink satellite business heavily subsidizing Musk’s rockets and xAI business.
Leadership. To see how Elon Musk runs a public company, look at his track record at Tesla. He transformed it from a struggling startup to a successful global EV giant. But he’s done a lot to squander that lead: the SEC fights, the social media fights, the lawsuits, the public insults, the tendency todiss his own colleagues, the threats to walk away if he didn’t get that other trillion-dollar pay package. (Sadly, no cage fight.) And let’s not forget his brief detour as the defiant chainsaw-wielding man from DOGE, which a Yale study estimated to have cost Tesla more than 1 million U.S. EV sales. Tesla’s operating profit was $4.3 billion last year, a 70% drop from three years earlier. He overpromised on robotaxis and fully self-driving cars. And, once again, Musk will have 85% of voting rights, making him virtually impossible to dislodge.
The Final Frontier: We’re looking at a $28.5 trillion TAM (total addressable market) here, people! SpaceX proved that you can launch rockets at a fraction of the cost of NASA. Then again, Artemis II put NASA back on the map. The Indian Space Research Organisation is also racing to bring down launch costs to compete with SpaceX, as is China’s Manned Space Agency. None of that diminishes Musk’s genius, accomplishments or ambition. But it should give investors pause. Musk deflated a Davos crowd this year by dismissing the idea of extraterrestrial life, noting “not once” have his satellites had to maneuver around a spaceship. Here on earth, he is not alone. Some fellow humans will buy SpaceX stock in the hopes that it will soar to infinity and beyond. Others may see an opportunity to compete and stage their own moonshots with a little more rigor and less drama.
Contact CEO Daily via Diane Brady at diane.brady@fortune.com
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CEO Daily is curated and edited by Joseph Abrams, Jason Ma, Claire Zillman, and Lee Clifford.
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