$17.5 Trillion! Valuation Myth or Money Pit? A Complete Guide to SpaceX's Epic IPO

Over the seven and a half years since Apple’s market capitalization surpassed $1 trillion, investors have become accustomed to seeing large tech companies achieve thirteen-figure valuations in the public markets.

Currently, the most attention-grabbing news is that SpaceX, the space exploration company controlled by Tesla founder and the world’s richest person Elon Musk, has announced plans for a large-scale initial public offering (IPO) in the coming months. Competitors in artificial intelligence, OpenAI and Anthropic, may also go public this year, with their valuations soaring into the hundreds of billions of dollars.

According to reports, SpaceX’s IPO is expected to raise up to $75 billion, breaking the record set by Saudi Aramco in 2019 with $29.4 billion. SpaceX’s valuation could exceed $1.75 trillion, but whether public market investors will be willing to buy stock supporting this valuation remains to be seen.

SpaceX has transformed from a relatively weak player in the aerospace industry into a giant, securing billions of dollars in government contracts and becoming a pillar of the U.S. space program. In addition to its rocket launch business, SpaceX also owns Starlink, a satellite internet broadband service that has become a major source of cash flow for the company. In February this year, SpaceX acquired xAI entirely through a stock deal, gaining Grok—a money-losing AI company whose flagship product is the Grok AI assistant. Additionally, SpaceX owns X (formerly Twitter), further diversifying its business portfolio.

SpaceX’s IPO will be a major market event, giving investors of all sizes the chance to participate in Musk’s rapidly expanding vision—to build a giant enterprise integrating space and artificial intelligence. However, skeptics worry that investors may fear Musk will deplete SpaceX’s funds to support xAI, one of many players in the highly competitive AI field.

Why is SpaceX planning an IPO?

Although SpaceX is believed to have substantial cash flow mainly from Starlink, the company still needs more capital to achieve its ambitious goals. A December last year, SpaceX told employees that proceeds from the IPO would be used for the continued development of the Starship rocket, space AI data centers, and lunar base construction.

SpaceX could choose to continue raising funds through private markets instead of going public. However, sources say that after acquiring xAI, its funding needs have increased significantly. xAI consumes about $1 billion in cash each month for infrastructure costs, including training AI models.

Furthermore, as a publicly traded company, SpaceX can raise funds more broadly, which could help its AI business raise capital faster than competitors like OpenAI and Anthropic, both of which have invested billions in their AI ambitions.

What are SpaceX’s target valuation and deal size?

A source familiar with the matter says SpaceX is considering a fundraising target of $75 billion. Previously, another insider indicated that SpaceX had discussed raising over $70 billion with potential investors. Both figures are well above the earlier reported $50 billion target. The valuation sought in the IPO could exceed $1.75 trillion.

The biggest question is whether such a valuation can be sustained in the public markets.

Analysts evaluate company value based on future earnings, growth prospects, industry competition, and profit margins. However, valuation is not an exact science. Especially in a bull market, investors sometimes pay higher prices for stocks based on factors beyond fundamentals.

Some may believe that SpaceX’s enormous potential in space could justify a stock price above what its current financials support. But challenges surrounding xAI could weaken its appeal.

For SpaceX, the downside of an IPO includes the need to disclose financials quarterly and explain them to Wall Street analysts and public investors. Additionally, if the stock price fluctuates wildly or drops significantly due to negative news, the plan could be affected.

What is the IPO timeline?

If all goes smoothly, Musk could list SpaceX as early as June 2026. Reports say SpaceX has selected some of Wall Street’s largest banks to handle the IPO filing, including the financial disclosures required by the SEC, which investors want to see before deciding whether to invest.

Typically, this process begins with a confidential filing. Even so, SpaceX might announce that it has taken this step publicly. After submitting a confidential filing, the SEC will review it, a process usually taking two to three months barring major delays. Once review is complete, the company will make the filings public.

This public filing will provide the first comprehensive disclosure of SpaceX’s financials and initiate a 15-day public comment period. After the comment period, the company will officially start selling shares, usually within a set price range, though the final price has not yet been determined.

How to participate in the IPO?

Once the price range is set, banks will accept orders from institutional investors. Meanwhile, retail investors can place orders through brokerages partnered with the banks. Many retail investors using popular platforms like Robinhood Markets and SoFi Technologies might be able to place orders directly, but allocations for hot IPOs are often very limited.

The day before trading begins, SpaceX and the banks will agree on the final share price and the number of shares to be issued. In setting the price, SpaceX and the banks will balance the interests of existing shareholders—who want to avoid dilution—and new investors eager to buy shares.

After the price is set, trading will commence the next day.

What preparations are Wall Street making?

The scale of this offering is unprecedented on Wall Street, attracting many bankers eager to help SpaceX go public. Most of the major Wall Street banks will participate in some capacity.

However, the true reputation of financial institutions depends on leading the offering and playing key roles in marketing, pricing, and allocation. Currently, five major banks—Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, and Morgan Stanley—are confirmed as lead underwriters, but their specific roles are not yet clear.

How will the acquisition of xAI affect SpaceX’s potential IPO?

Not everyone is pleased with SpaceX’s acquisition of xAI before its IPO. Because xAI is burning through cash rapidly, this could weaken SpaceX’s core business, especially Starlink.

Investors who thought they held stakes in the space company now face significant exposure to the risks of AI. Conversely, skeptics of the AI industry see SpaceX as another high-risk player in a competitive arena. If SpaceX is viewed as a bloated conglomerate, its valuation might fall below expectations.

Musk believes that the combination of rockets, space internet, AI, and social media creates a “vertically integrated innovation engine,” especially suited to capturing commercial opportunities in space data centers.

A Pitchbook analyst said consolidating all businesses under one roof creates a unique proposition: “Starlink’s user growth, deployment advantages, and direct-to-base station infrastructure—this combination doesn’t exist anywhere else in the public markets.”

How will SpaceX’s IPO affect Musk’s control of the company?

Before acquiring xAI, after multiple rounds of private funding involving external investors like Peter Thiel’s Founders Fund, Fidelity, and Alphabet, Musk’s ownership stake in SpaceX was less than 50%. It’s unclear how much he will hold after the xAI deal. SpaceX is considering an ownership structure post-IPO that would allow insiders (possibly including Musk himself) to retain near-total control over key strategic and operational decisions. Investors attracted by SpaceX’s potential and Musk’s track record may not mind this, but if problems arise and investors push for leadership changes, it could cause issues.

How will Musk pitch SpaceX to IPO investors?

The core of Musk’s pitch is that SpaceX dominates commercial space, with huge growth potential, and maintains close ties to defense and telecommunications sectors. Additionally, SpaceX owns Starlink, a global high-speed internet service, which is a “cash cow,” and has a significant competitive edge in rocket launches.

Convincing investors that these businesses can also help SpaceX dominate in AI is more challenging. To justify the enormous valuation, Musk will leverage his popularity and past achievements, including Tesla’s stock soaring nearly 3,000% over the past decade. For some potential IPO investors, this may serve as the best advertisement.