Is SpaceX, the largest IPO in history, the new-era East India Company?

Source: Social Capital founder Chamath Palihapitiya's research report Deep Dive SpaceX; this is a condensed version, Gold Finance Claw Editor

SpaceX is about to become the largest IPO in history.

This valuation is based on the argument: SpaceX has already opened the lowest-cost route into space, and the greatest opportunities are still ahead.

What kind of opportunity is this? Can SpaceX seize this opportunity?

A useful analogy begins in 1497.

For centuries, spices were transported to Europe via land routes controlled by Arab and Venetian middlemen. By the time pepper reached Europe, prices had increased 20 to 30 times.

Portuguese navigator and explorer Vasco da Gama discovered a sea route around the Cape of Good Hope, completely bypassing all land middlemen. This move drastically disrupted the cost structure of trade. Companies controlling the emerging maritime trade became some of the most valuable in history.

In 1600, the British East India Company sailed this route independently. In 1602, the Dutch established the Dutch East India Company (VOC), following shortly after.

By 1720, the market value of the Dutch East India Company peaked, accounting for about one-third of the entire Dutch Republic’s annual economic output,** a ratio far exceeding any company today, including Nvidia and Apple**.

SpaceX is changing the economic landscape of space exploration, just as Vasco da Gama changed the economic landscape of Asian exploration.

For European merchants, spices were the greatest wealth.

For the modern economy, space exploration offers three potential sources of wealth:

1. Connectivity. Most of the world’s internet still relies on physical cables, which do not cover all regions. Starlink can provide broadband service from orbit to anyone, anywhere.

2. Computing. AI data centers on Earth face power bottlenecks. Building new data centers requires grid access, and approval processes often take years, while power supplies are becoming increasingly scarce and expensive. Space has abundant solar energy resources and is not constrained by land, grid, or approval issues faced by terrestrial data centers.

3. Critical minerals. Rare earth elements essential for AI chips and energy storage systems are mainly controlled by China. The moon and asteroid belts contain far more rare earth reserves than any on Earth, and these reserves are not part of any national supply chain.

All of this hinges on one obstacle: the cost of reaching orbit.

For sixty years, the cost of reaching orbit has been prohibitively high, affordable only by governments. But SpaceX has changed all that.

By 2025, they launched 85% of the satellites globally, more than all other space projects combined. They achieved this by making rockets reusable, increasing launch frequency, and shifting more manufacturing in-house.

NASA’s space shuttles delivered cargo to low Earth orbit at a cost of $54,500 per kilogram. SpaceX reduced this to $2,720, a 20-fold decrease, confirmed by NASA’s own cost analysis.

SpaceX is currently on the main commercial route into orbit, and Starlink is the first proof that this route can bring about significant transformation.

Low-cost launches have enabled SpaceX to build the world’s largest satellite internet network and update it faster than any other company. The Starlink project aims to convert orbital access into $11.4 billion in recurring broadband revenue by 2025.

The same route to orbital broadband may now reveal SpaceX’s next frontier: orbital computing.