Interest in SpaceX has grown exponentially over the past few years as the company morphed into a space-sector titan. But investors should expect some turbulence as it prepares for its public debut.
Shares of a publicly traded SpaceX will act like Tesla's stock $(TSLA)$ "on steroids," PitchBook analyst Franco Granda wrote in a Tuesday report. The electric-vehicle company, also run by Elon Musk, is known for having a volatile stock.
SpaceX is poised to file confidentially for an initial public offering as soon as this month, according to Bloomberg, which reports that the company may seek a valuation of more than $1.75 trillion. It's targeting a June IPO to coincide either with Musk's birthday or a rare planetary alignment.
The Starbase, Texas-based company is estimated to be worth about $1.25 trillion following the absorption of xAI, Musk's artificial-intelligence firm, which is behind the controversial Grok chatbot.
PitchBook estimates that SpaceX will be capable of generating $150 billion in revenue by 2040, as well as adjusted profit of $95 billion. That would be up from as much as $16 billion in revenue and $8 billion of profit last year. Some $42 billion in future annual revenue could come from Starlink, a satellite-internet business that currently accounts for most of SpaceX's cash.
The estimate does not account for xAI, which has been bleeding cash fast but could pick up additional work with the U.S. Defense Department. The projections also assume that Tesla and SpaceX do not merge, though that possibility has been floated by Musk and analysts in the past.
"My companies are, surprisingly in some ways, trending toward convergence," Musk wrote on X last November.
A lot of lessons investors have learned from Tesla will likely be applicable to SpaceX, Granda said. For one, both are subject to Musk's infamous public optimism.
Granda pointed to Tesla's promise that it would produce 5,000 units weekly by late 2017 before the company suffered "production hell" and missed the target. But when it finally hit that milestone in mid-2018, the stock surged.
SpaceX has had similar delays. Development of the Starship megarocket has suffered several setbacks, as have other vehicles in the company's history. Musk had once pinned 2022 as an "aspirational" timeline to send an uncrewed mission to Mars, a task that in 2026 is still years away.
However, investors have grown to expect Musk's time lines to be flexible.
That's why they were calm as a December robotaxi deadline came and went. The stock then popped when Musk achieved the stated target slightly behind schedule. Granda calls this a "credibility ledger," under which investors automatically price in delays while focusing on the overall vision.
That could be useful for SpaceX, which recently pushed back its plan to colonize Mars. It's also filed with regulators to launch up to 1 million space-based data centers into orbit, which would be reliant on progress with Starship. SpaceX now says it plans on developing a city on the moon.
But a publicly traded SpaceX, answering to a Wall Street investor base, will still have to hit those goals while also showing progress with xAI and Starlink. Expect potentially extreme stock reactions: Granda predicts that major news items that would have driven 10% or 15% moves for Tesla's stock will end up causing SpaceX shares to swing by 20% to 30%. That's partially because SpaceX is expected to have a public float of just 3.3%, he added.
SpaceX's stock will also likely benefit from the so-called Musk premium, which has helped keep Tesla shares elevated even as its core EV business declines. But that halo also leaves Musk's companies overly dependent on him.
"Over 50% of the shareholders today would say that Tesla is Elon in Elon is Tesla," Cantor Fitzgerald analyst Andres Sheppard previously told MarketWatch. "There are a lot of people, maybe even a majority, who correlate Tesla's success with Elon's tenure."
Tesla's annual report notes the company's reliance on Musk and warns that shares could take a dive if Musk had to sell some of his stake. SpaceX, which Musk founded over two decades ago, could be just as dependent on its CEO, who owns an estimated 44% of the company.
Negative news from Tesla will likely put pressure on SpaceX shares and vice versa, according to Granda. Meanwhile, Musk's politics have also been a source of controversy - and lost sales - for Tesla.
"The combination of lower float, earlier-stage technologies and concentrated Musk exposure suggests volatility exceeding Tesla's historically turbulent patterns," Granda said.
