SpaceX to Launch IPO Project Pitch; Can the High Valuation Be Sustained Relying on Musk's Ability to Sell Dreams

According to sources familiar with the matter, SpaceX and its investment bank will hold a series of meetings to conduct a “stress test” on the company’s $2 trillion valuation targeted during its upcoming IPO. This is a critical step in its path toward the largest-ever initial public offering (IPO).

Two months after completing the merger with xAI, senior bankers responsible for the project are about to initiate discussions to assess whether the company’s lofty valuation still attracts investors. Sources say the company’s valuation is currently expected to exceed $2 trillion, higher than the approximately $1.75 trillion anticipated less than two weeks ago.

David Erickson, an adjunct professor at Columbia Business School and former co-head of global equity capital markets at Barclays, stated, “One thing you must be convinced of—and this is what they will keep striving for before filing publicly—is to keep selling the dream; and when it comes to selling the dream, hardly anyone is better than Elon Musk.”

SpaceX did not immediately respond to requests for comment. Musk appeared to counter the $2 trillion valuation target in a post on X platform on April 3, saying, “Don’t believe everything you read.”

If the market cap exceeds $2 trillion, SpaceX’s size would be only smaller than the market caps of the five largest companies in the S&P 500: Nvidia, Apple, Alphabet (Google’s parent company), Microsoft, and Amazon. Although SpaceX’s revenue accounts for only a small portion of these companies, its market cap would surpass Meta Platforms Inc. and Musk’s own Tesla—both members of the so-called “Big Seven.”

According to analyst estimates, such a valuation would imply a price-to-sales ratio (P/S) of over 100 times based on the past 12 months, easily surpassing Palantir Technologies’ high P/S of about 79 times—already one of the highest among S&P 500 stocks.

Bloomberg industry research estimates that SpaceX’s rocket launch business and Starlink satellites will contribute most of its revenue, reaching nearly $20 billion by 2026; meanwhile, xAI’s revenue may be less than $1 billion.

Erickson said, “The reality is, this isn’t about fundamentals. From a mathematical perspective, no one can justify that valuation based solely on fundamentals; it’s beyond mathematical explanation.”

Sources previously told Bloomberg that the company plans to conduct two more rocket test flights before going public in June. Franco Granda, senior analyst at PitchBook, pointed out that these two test flights are “crucial for pushing the IPO forward.”

He said in an interview, “If either of these tests fails, the IPO might not even happen. It will determine everyone’s attitude and direction toward the IPO.”

On Friday, Musk posted on X platform that the latest version of SpaceX’s reusable super-heavy launch vehicle is expected to make its first flight in four to six weeks.

Granda from PitchBook said, “It was initially a capital-intensive great company, but now it’s starting to venture into some truly sci-fi projects, and the numbers for these projects are not optimistic.”