SpaceX IPO: The Tesla of Space-- Is It A Buy?
Largest IPO in history... trap for retail?
SpaceX IPO
SpaceX is about to be the biggest IPO in history, potentially raising as much as $75 billion at a $1.75 trillion valuation. The timing of the IPO is unknown, but estimates suggest it will happen in the summer.
They plan to raise more than double the previous record holder, Saudi Aramco, which raised $29 billion during its IPO in 2019. The world’s largest oil producer, almost entirely state-owned in Saudi Arabia.
Business Model
Let’s talk about what we know of SpaceX’s business. We don’t have an S-1 to get concrete details on their financials, or some other important info. For now, we can cover what has circulated in the news or analyst reports.
As you likely know, Elon Musk founded SpaceX in 2002 with one central goal: dramatically reduce the cost of space access, and eventually make humanity multi-planetary.
So, when many people think of SpaceX, they often think of the reusable rockets like the Starship and Falcon. You’ve probably seen the video of the spaceship landing back into the arm grabbers…
But the majority of their revenue is actually generated by Starlink, their constellation of roughly 10,000 satellites, that serves internet access to more than ten million broadband subscribers in over 160 countries. The satellite internet division is their true cash cow. PitchBook estimates Starlink generated roughly $10.6 billion dollars in revenue in 2025, representing about 67% of total company revenue at a 54% EBITDA margin. A type of margin you wouldn’t typically expect from what sounds like a capex-intensive business.
SpaceX, like Tesla, has substantially reduced costs through vertical integration. They design, manufacture, and launch their own satellites… and operate the entire network and supply chain.
That plays a key role in their second business line, the launch services. Putting spaceship payloads into orbit for government and commercial customers. Launch revenue was an estimated $3.5 billion in 2023 from Falcon 9 and Falcon Heavy missions, with individual Falcon 9 launches running about $62 million each and Falcon Heavy at around $125 million.
SpaceX is one of the largest U.S. government and military contractors, including a $5.9 billion Pentagon deal for 28 national security launch missions through 2029, and an $843 million NASA contract to deorbit the International Space Station (ISS)
SpaceX also holds broader contracts for commercial crew flights and cargo resupply missions to the ISS, as well as for the Artemis III Human Landing System using Starship.
So, much like Palantir, SpaceX will have incredibly sticky revenues from government contracts for the space launch business. And subscription revenues from residential or commercial customers for Starlink internet services.
Starlink also provides services through Starshield, similar to Starlink but for government or military applications.
This is a capital-intensive business for sure… but this level of recurring revenue, from subscriptions and contracts, is like investor heaven.
In total, PitchBook and Morningstar estimate SpaceX generated approximately $16 billion dollars in revenue and $7.5 billion in EBITDA in 2025. Revenue is expected to hit $22 to $24 billion this year. 50% potential revenue growth for a business at a nearly $2 trillion market cap is amazing. Granted, at these numbers, with a $1.75 trillion IPO, that means SpaceX could open trading around 95x times revenue and 200x times EBITDA.
Incredibly expensive, but if the markets over the last decade have proven anything, it’s that valuations can remain overextended for many years. So who knows. Companies like Palantir and Tesla have done well, overall, regardless of what the markets would traditionally think…
Their revenues are set to grow dramatically thanks to Starlink, and the kicker will be their direct-to-cell offering. DTC was initially rolled out in 2025 with T-Mobile, providing access directly to unmodified phones, without any need for a modem. The service now extends to AT&T and Verizon customers as well. This new piece of the business already has over 6 million monthly customers across 22 countries.
SpaceX’s deal with EchoStar, valued at $19 billion in total through 2027 in cash payments and stock, granted them access to Echo’s spectrum-platform and licenses to offer increased access to DTC customers across the globe.
As SpaceX enters more markets and expands coverage around the world, they have large potential markets to enter in developing economies. So, growth won’t be slowing down any time soon…
PitchBook projects the subscriber base could reach over 1 billion users by 2040. Even a fraction of that number translates to significant growth. So, the business is firing on all cylinders and has hit the growth phase of its lifecycle.
TAM and Competition
The World Economic Forum and McKinsey project that the space industry will be valued at $1.8 trillion by 2035, roughly tripling from current levels. Novaspace projects it will $1 trillion by 2034.
And there are various other estimates of course, they all point to one thing, substantial growth. And with substantial growth potential, substantial TAMs, comes competitors.
In launch services, Blue Origin is the most direct peer. Jeff Bezos’s company launched its New Glenn heavy-lift rocket in January 2025.
The United Launch Alliance, the Boeing-Lockheed Martin joint venture, operates the Vulcan Centaur rocket, which gained Space Force certification in early 2025. ULA has deep government relationships and receives roughly one billion dollars in annual military subsidies, but it cannot compete with SpaceX on price. Boeing and Lockheed will likely be totally focused on securing government contracts, but SpaceX has the clear advantage in both cases.
Rocket Lab (RKLB) is the most obvious public competitor for SpaceX. Its smaller Electron rocket has demonstrated real launch reliability, and the company is developing a medium-lift Neutron rocket, competing with SpaceX on smaller payload and satellite missions.
In the satellite broadband space:
Amazon’s Project Kuiper (Kyper) is on the rise. Amazon has committed $10 billion dollars to deploy 3,200 satellites by 2029. Kuiper has the capital and logistics infrastructure of Amazon behind it, but it’s years behind Starlink, which already has around 10,000 satellites in orbit.
OneWeb operates about 640 satellites with a focus on enterprise and government clients.
The EU’s IRIS program operates a network of 300 satellites to reduce reliance on foreign competitors for broadband services.
So, there is some competition for all aspects of SpaceX’s business, but they have a massive first-mover advantage here. No competitor out right now can match its vertically integrated model, where it launches its own satellites on its own rockets at its own cost structure.
A Wide Moat
This brings us to the question of how strong SpaceX’s moat is… and It is probably one of the widest existing moats in history. But competitors with vast resources, like Amazon, or Boeing and Lockheed, can crack it eventually.
No other company has figured out reusable boosters and this level of vertical integration. So, SpaceX’s launch costs are around 70 to 90% below what competitors can offer right now.
Of course, building and flying rockets requires billions in capital investments, years of development, and regulatory approval from government agencies. SpaceX launched its first rocket 4 years after the company was founded in 2006. And the first successful launch was 2 years later in 2008.
Switching costs are also high for government customers. If the U.S. Pentagon is relying on Starlink for battlefield connectivity or SpaceX for national security needs, then they are unlikely to replace that infrastructure.
In summary, you’re looking at cost leadership, regulatory barriers, and switching costs that put SpaceX in a great position, at this point.
Risks
Of course, first off, you have Elon Musk. He is the CEO, CTO, and Chief Designer at SpaceX. Whatever your personal opinions on the man, he is a genius, but… Musk is now splitting his time across at least six major ventures plus government advisory work. The man is distracted, and gets himself into trouble meddling in politics now.
Providing so many services to the U.S. government can also hurt him in markets like China or Russia. Usage by Ukrainian military forces and potentially in other military conflicts could even make SpaceX a military target.
Who knows how likely that is, but it is a possibility. So, anyone investing in SpaceX should realize both the positives and negatives Musk brings.
As I mentioned, competition with Amazon is intensifying and they can allocate essentially an unlimited level of capital if they choose to. Which would threaten Starlink’s growth. The payload launch business is more challenging for competitors to contend with.
Another one is, as I talked about at the start of the podcast… the valuation. 200 times EBITDA leaves little room for error. If the market crashes cause of the conflict in the Middle East, investors buying at IPO could get burned for years.
Any delays on Starship commercialization or slowdowns on Starlink subscriber growth could compress growth multiples and have a similar effect. People should be prepared to hold this stock for a long time if they want to buy in immediately.
SpaceX Subsidizing Musk’s AI Investments
And lastly, the acquisition of xAI and Twitter into SpaceX is clearly an attempt by Musk to justify his investments in the AI race. Merging an AI startup burning over $1.5 billion a quarter building out data centers into SpaceX, which has become incredibly profitable… just hurts the profitability numbers. Why should SpaceX have to subsidize Musk’s AI investments? Twitter is also losing $500 million a quarter, I believe. So, that’s over $2 billion in quarterly losses that SpaceX has to deal with.
There was also $17.5 billion in debt from xAI and Twitter combined, which has now been paid off. They did not say where the company came from, but xAI did do a $20 billion raise in January, so seems like it came from diluting xAI equity. They at least didn’t have to use SpaceX’s cash to do it. But it’s still ridiculous to me.
Musk justified merging Twitter and xAI into SpaceX because of the central data center issue. Maybe in the future… SpaceX can integrate with xAI and launch data centers into orbit.
This plan to create data centers in space, powered on solar power with no need for cooling… is just absurd. At least on any reasonable timeline. Remember, Elon Musk first talked about having 1 million Tesla vehicles in a Robotaxi network in 2019, and Tesla was just now getting the network started in 2025. Musk is now promising data centers in space in just 2-3 years from now. This man always predicts things will happen faster than they do. So… maybe it happens eventually. But it won’t be any time soon.
Sure, the acquisitions… in theory, made SpaceX more valuable. But this is a net-drag on the business. The only reason it makes any sense is cause Musk owns all the companies. Grok is over it’s head, in one of the most competitive markets on the planet right now, the AI race. Dealing with Google, Anthropic, and OpenAI.
SpaceX’s COO even said herself, xAI is largely operating as its own entity after the acquisition, so I don’t how the market can justify this is a good thing, but whatever. Elon gets to do what he wants.
Overall, SpaceX seems like it is a great business, but as always with Elon’s companies, the valuation is rich. We can see more concrete details when they file an S-1 form with the SEC, which might happen as early as next week.
I think there is a good chance retail investors get totally burned on this IPO, which insiders or large investors could use for exit liquidity right before a potential market crash due to a brewing energy crisis. But only time will tell. Long-term investors will be pleased with SpaceX, in the long run, either way if the company sustains the levels of growth it is seeing right now. We will have to watch and see what happens…
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