To The Moon

SpaceX is set to list on the Nasdaq under ticker $Space Exploration Technologies(SPCX)$ on June 12, targeting around $1.5-1.75 trillion valuation at $135 per share — roughly a $75 billion raise, the largest IPO on record. The oddity that makes it matter isn’t necessarily just the size; it’s the design. While a typical large offering reserves 5–10% of shares for retail investors, SpaceX has signaled up to 30% — at least triple the norm. Thus, the retail base that shaped Tesla’s valuation has a second and arguably purer way to express the same bet.

Tesla’s Price Moves on Musk

The premise the rotation thesis rests on is that Tesla’s ($Tesla Motors(TSLA)$) valuation is unusually tethered to its CEO as a person. This is the most documented claim of the lot, because the catalysts are non-operational — no earnings, no deliveries, no recalls.

On June 5, 2025, Tesla shed roughly $152 billion in market cap in a single day — the largest one-day loss in its history — when a public clash with Trump threatened Musk’s government contracts. On July 7, the stock fell around 6.8% after Musk announced he was forming a political party.

 However, the reactions run in both directions. When the catalyst is positive-Musk, the same base bought: around $256 million in retail inflows was estimated over five days even as the stock sat down 23% year-to-date.

Three documented facts together produce cult-like price behavior without needing a diagnosis: an ownership base tilted toward retail to a degree no mega-cap peer matches (estimates range 32–42%), a demonstrated price sensitivity to Musk-the-person, and a valuation openly decoupled from the car business — 2025 deliveries fell 8.5% to around 1.63 million, the largest annual decline in company history, and the company’s European market share slipped from 2.4% to 1.7%, even as the stock hit an all-time high of $489.88 in December.

The counter-case deserves a note: pricing Tesla on robotaxi and Optimus optionality rather than current car sales isn’t necessarily irrational — it’s a venture-style bet that places Musk as an irreplaceable variable or “key-man”.

The Tesla-to-SpaceX Rotation Thesis is Loud

There are arguably two tiers of evidentiary quality around the notion that the Tesla fanbase will now buy SpaceX directly:

1. Measurements of retail money indicate only around $1 million in net SpaceX-related retail inflows through May while Tesla retail buying has, if anything, strengthened in the same period. However, a strong counterpoint that is also quite mundane: there’s nothing to rotate into until June 12.

2. Some forecasters argue that the IPO will weigh on the stock by “splitting” the pro-Musk retail base that owns about 32-40% of all publicly available shares. While fund managers are reportedly weighing tech sales to fund allocations, these forecasts/opinions — such Jim Cramer floating a “rotation trade” idea after JPMorgan upgraded its 11-year Sell recommendation to a “Hold”, or Barchart pitching for a switch to the SpaceX IPO — can best considered as advocacy as opposed to evidence.

A separate and often-conflated mechanism is that once SpaceX qualifies for major indices, passive funds tracking the SPY, QQQ and IWM ETFs must sell holdings to buy it, with forced flows being estimated at $15–30 billion on a conservative basis and over, $100+ billion on an aggressive tenor. However, this mechanism is mechanical and market-wide, and not specifically a Tesla “fanbase retail investor” action.

In summary: while the splitting risk is real, it is forward-looking.

The Merger Speculation

While reports claim that Musk has discussed folding his companies together and Future Fund’s CEO Gary Black has posited that this will be heavily dilutive (at least 28%) in value to Tesla stockholder, there have been no announcements on a merger. The basis for this stems from an amendment in SpaceX’s S-1 noting that the company “may issue a significant amount of equity in connection with future transactions.” This is boilerplate language found in most S-1s.

However, the mechanism for folding Tesla into SpaceX does have a real-world tech exemplar in the Facebook-WhatsApp deal in February 2014 enacted by WhatsApp co-founder CEO Jan Koum and Facebook CEO Mark Zuckerberg.

News of the deal effectively changed the deal value, which rose from around $19 billion at the time of announcement to around $21.8B at close simply because Facebook’s shares — which was effectively used to fuel the deal — climbed to about $77.76. Despite having $10.2 million in revenue and $138 million in losses in 2013, WhatsApp was thus valued by Facebook near $22 billion (or roughly $55 per user). Koum’s entities received 76,357,462 of Facebook’s Class A shares and approximately $1.97 billion in cash. Koum’s personal take, valued at the October 6 close of around $77.76 plus $1.97 billion in cash translates to roughly $7.9 billion in value as of that time.

In 2014, Zuckerberg was on one side of the table and Koum on the other, i.e. two different principals were negotiating. In a SpaceX–Tesla deal, this isn’t the case: Musk (SpaceX) will assign Musk (Tesla) a high valuation, award Musk (Tesla) shares of Musk (SpaceX) plus possibly several billions in cash. The cash component wouldn’t entirely be without merit. As per reports, Musk’s pay package at SpaceX is heavily conditional:

1. 200 million in super-voting restricted shares (​which carries 10 votes to every 1 Class A share) would be awarded if SpaceX’s market value reaches $7.5 trillion and establishes a ​permanent human colony on Mars with at least 1 million people.

2. If separate valuation goals are met and SpaceX data centers in space provide at least 100 ​terawatts of compute capacity, as many as 60.4 million in restricted shares would be awarded in tranches.

Since 2019, Musk has received a nominal salary of $54,080 per year from SpaceX since 2019. Since the end of 2025, he also held 68.8 million in previously awarded Class B stock options with a strike price of about $42 that expire in 2031, allowing Musk to pocket any profit above that amount if ‌he exercises ⁠the options before that date.

Given the conditions and the modelling of probabilities of achievement, it effectively means that Musk may never make any money. A merger process, thus, becomes a cash generation method for the principal.

An AI Bet By Another Name

SpaceX’s language in its S-1 states that it has identified “the largest actionable total addressable market in human history” by estimating a Total Addressable Market of a whopping $28.5 trillion. The catch: most of it is AI, not rocketry or bases on Mars.

SpaceX posted a net loss of $4.94 billion in 2025, and Q1 2026 alone produced a net loss of around $4.28 billion in a single quarter, with the accumulated deficit now at $41.3 billion. While losses are unambiguously accelerating, the trajectory is mostly an artifact of the February 2026 xAI acquisition — which was recast into the financials.

In an all-stock deal, SpaceX acquired xAI by issuing new SpaceX shares to xAI shareholders — a share exchange converting each xAI share into 0.1433 SpaceX shares. Before that, i.e. in 2024, SpaceX was actually profitable at $791 million net income.

The biggest driver of profitability in the non-AI/“space business” is the Connectivity (Starlink) segment, wherein every one of its metrics is trending up sharply.

In 2025, Connectivity generated $11.387 billion in revenue, $4.423 billion in income from operations, and $7.168 billion in adjusted EBITDA — year-over-year growth of 49.8%, 120.4%, and 86.2% respectively.

With operating income growing faster than revenue, the segment is running an operating margin near 38.6% — with the S-1 filing attributing this to rising per-satellite payload utilization, flattening ground-station depreciation, and direct-to-cell adding minimal incremental cost.

However, even the TAM ascribed to “Connectivity” doesn’t even reach consensus among telecom analysts, as roughly 90% or more of that opportunity is out of reach due to the physics of LEO communications that Starlink employs and its rocketry segment mostly services.

The Sleight of Hand in xAI

SpaceX’s acquisition of xAI was private and reportedly done without consulting all investors in the companies. But this was the third major act following two others:

1. In March 2025, xAI had acquired X (formerly Twitter) in an all-stock transaction that valued X at $33 billion.

2. In January 2026, Tesla invested (or committed to) invest $2 billion in xAI while Humain — Saudi Arabia’s state-backed AI company — invested $3 billion in xAI. Potentially part of a $20 billion financing round for xAI, each of these investments likely represented a less-than-5% stake in xAI.

Reports and communications released by Musk-owned companies indicate the overall mergers and investments as “a share exchange” through what is referred to in the indusrty as a “reverse triangular merger” in which xAI continued as a subsidiary of SpaceX and the overall deal intended to be tax-free. The SpaceX-xAI deal — which provides the basis for most of the valuation being claimed — itself is being deemed a fiduciary stress test, given how this was done privately with seemingly no oversight or procedural rigour.

Overall, the common controller across Musk’s businesses is (of course) Musk himself while his businesses are enmeshed more so than a standard IPO would clarify or inform.

Interestingly, at least six senior founding members have exited the company in the year till date — a not-unfamiliar pattern as Musk companies’ rosters (including their executive ranks) are generally known for their high churn amid lay-offs and burnouts under tough working demands. If exited at a senior enough level/vestment, the choice to redeem xAI-turned-to-SpaceX shares for cash could potentially have been exercised already.

A Tough Test Ahead

In early June, analysts at Morningstar declared that SpaceX has a narrow economic moat with a total potential value of $780 billion, about 48% below its private market valuation. While SpaceX has launched more than 50% of global launches by 2025:

Starlink accounted for two-thirds of the client mix. If everything goes right, SpaceX might capture about 4% of global compute capacity by 2039:

Only around 4.4 million users of X are paid subscribers and make up under 1% of monthly active users as of 2026 — implying its long-term ability to generate returns on invested capital remains in doubt. Also, Grok isn’t considered as one of the leading AI labs in the world today and most scenarios don’t meaningfully add to or subtract from the valuation of the AI business.

In effect: a chain of events in the private market space have boosted the valuation of the non-space parts within SpaceX — the most speculative of which is the AI market where it presently has no meaningful foothold but has ascribed a TAM greater than the entirety of the U.S. economy — while its most meaningfully profitable “space business” is assigned a TAM deemed beyond reachability in a substantial manner in the leadup to the IPO. Given the fiduciary stress test scenario — which could be grounds for litigation after the IPO — the months after the IPO also brings to the fore another test for the public markets when private investors’ vesting periods lapse and optionality on shareholding is activated.

Presently, a lot of what SpaceX offers in value reposes in the “image” of Musk himself — namely in his purported ability to make the “impossible” plausible, thus embedding him as the “key-man” in his company. But the fact remains that Musk’s companies operate in areas with plenty of competitors with products and services at various stages of viability and practically no switching cost for consumers.

The Morningstar 48%-discounted estimate might even be deemed generous in terms of valuation, given the business environment. However, valuations are discounted from reality — a frequent pattern seen in the tech sector, including Musk-run Tesla.

The months leading from SpaceX’s IPO will be informative as to the valuation of the “Musk image” more so than SpaceX, Tesla, Starlink, Grok or X by themselves.

Meanwhile, a number of products are being launched in LSE on Friday, with one being a “leveraged long” position on SpaceX:

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It might do investors with access to LSE products to consider if this is the moment to enter into SpaceX.

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For broader articles that deep-dives into business and culture in Asia, visit asianomics.substack.com. Numerous new articles have been published that fully explain the rationale behind the commentary I’ve made in various European publications over the past few months such as the explosion of Q1 review of global financials and tech, India’s shipbuilding ambitions, and numerous other topics en route to publication.