Whatever your view of Elon Musk, he has come up with some really significant businesses. Tesla isn’t for everyone these days but the company undoubtedly revolutionised the auto business. For years electric vehicles had been quirky things that looked weird. Tesla overnight made EVs cool, and Musk has turned that into a trillion-dollar business.
Similarly, SpaceX is at least trying to bring down the cost of space travel and to reduce the amount of waste by eventually making all parts of its latest rocket reusable. We can ignore the multiple tests that have worked or suffered what are euphemistically referred to as “anomalies”.
Satellite business Starlink has been a big success. As for X, the app formerly known as Twitter, maybe the less said about that the better.
SpaceX may be a worthy business but is it worth a punt by retailer investors? Bearing in mind that this column does not provide financial advice, it is worth looking at some of the colossal numbers being thrown about for its upcoming IPO.
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The company is planning to raise $75 billion, which would easily make it the biggest IPO on record. But that’s not the most notable figure coming out of this flotation. It is aiming for a valuation of up to $1.75 trillion. Yes, trillion.
Such a number would instantly catapult it into the group of the most valuable companies on the planet. But is it a realistic valuation?
Already there appears to be no shortage of scepticism. Analysts at Morningstar, for example, have pinned the company as being worth about $780 billion – not a small amount by any stretch, but barely half what SpaceX thinks it is worth.
Regardless of who is right, it sets the scene for what may well be a particularly volatile debut on the public market.
On Friday, it emerged that S&P Dow Jones Indices, which runs the S&P 500 index, a key index for companies to be included in as it would effectively force a number of funds tracking the index to buy the shares, said it would not change its rules to include SpaceX.
While it is among the most-hyped flotations in years, it is far from certain that SpaceX will have a successful launch.
