Elon Musk Recreates the Capital Myth? SpaceX IPO Approaching, Stock Price Fluctuations Could Be More Volatile Than Tesla

Source: Jin10 Data

In recent years, as SpaceX has gradually transformed into a giant in the aerospace industry, market interest in the company has grown exponentially. However, investors should expect that after its public listing, the stock price may experience significant volatility.

According to Bloomberg, SpaceX may secretly file for an IPO as early as this month, seeking a valuation of over $1.75 trillion. The company plans to go public in June, possibly coinciding with Elon Musk’s birthday or a rare planetary alignment. Headquartered in Starbase, Texas, SpaceX’s valuation is estimated to be around $1.25 trillion after acquiring Musk’s AI company xAI.

PitchBook analyst Franco Granda wrote in a report on Tuesday that the performance of SpaceX stock after listing will resemble Tesla (TSLA.O) stock, “but with greater volatility.”

Future growth expectations: Starlink to contribute major revenue

PitchBook projects that by 2040, SpaceX’s revenue will reach $150 billion, with an adjusted profit of $95 billion.

In comparison, the company’s highest annual revenue last year was about $16 billion, with profits around $8 billion. Future annual revenue of approximately $42 billion may come from the Starlink satellite internet business, which currently accounts for most of SpaceX’s cash flow.

This forecast does not include xAI’s business. xAI is currently burning cash rapidly, but may secure more projects from the U.S. Department of Defense in the future. The forecast also assumes Tesla and SpaceX will not merge, although Musk and some analysts have previously suggested such a possibility.

In November last year, Musk wrote on X platform: “My companies, surprisingly to some, are moving toward integration.”

Elon Musk Effect: Vision-driven but timelines often delayed

Granda said that many lessons learned from Tesla may also apply to SpaceX. For example, both companies are influenced by Musk’s well-known public optimism.

He cited Tesla’s promise to produce 5,000 cars per week by the end of 2017, which then fell into “production hell” and failed to meet the target. However, when the company finally hit this milestone in mid-2018, its stock surged.

SpaceX has also experienced similar delays. Its Starship super rocket has faced multiple setbacks during development, and other spacecraft projects in its history have encountered similar issues. Musk set 2022 as the “ideal target” for sending uncrewed missions to Mars, but by 2026, the mission still requires several more years to realize.

However, investors have gradually become accustomed to Musk’s flexible timelines.

Therefore, when the December deadline for autonomous taxis passed without incident, investors did not panic excessively. When Musk later achieved the set goals, the stock price rose accordingly. Granda called this phenomenon “credibility accounting,” where investors automatically factor in delays but focus more on the overall vision.

This could be advantageous for SpaceX. The company recently delayed its Mars colonization plans and applied for regulatory approval to launch up to one million space data centers into orbit, a plan dependent on the progress of the Starship project. SpaceX also announced plans to build a city on the Moon.

Post-IPO challenges: Increased volatility and high dependence on Musk

As a publicly listed company, SpaceX will still need to achieve these goals while making continuous progress in xAI and Starlink businesses. Therefore, market reactions could be very intense.

Granda predicts that if major news typically causes Tesla stock to fluctuate by 10% to 15%, SpaceX stock could see swings of 20% to 30%. Part of this is because SpaceX is expected to have only about 3.3% of its shares in public circulation.

SpaceX stock may also benefit from the so-called “Musk premium.” Even if Tesla’s core electric vehicle business declines, this premium helps keep its stock price high. However, this halo also means that Musk’s companies are highly dependent on him.

Cantor Fitzgerald analyst Andres Sheppard previously said:

“Today, more than 50% of shareholders believe Tesla is Elon, and Elon is Tesla. Many, perhaps most, directly associate Tesla’s success with Elon’s tenure.”

Tesla’s annual report also mentions the company’s reliance on Musk and warns that if Musk is forced to sell some of his holdings, the stock price could fall. SpaceX was founded by Musk over twenty years ago, and he currently owns about 44% of the company. Its dependence on him as CEO is likely similarly high.

Granda noted that negative news from Tesla could likely pressure SpaceX’s stock price, and vice versa. Additionally, Musk’s political stances have sometimes sparked controversy and affected Tesla’s sales. Granda summarized:

“Lower float, earlier-stage technology, and high concentration of Musk’s risk exposure mean that its volatility could surpass the already quite intense fluctuations in Tesla’s history.”