You can take or leave Elon Musk as a media phenomenon, but the SpaceX IPO is a major deal for the stock market and the future of business investment. If you remember the difficulty the market had getting its collective head around listing Twitter and other social media, this is easily an equivalent level of difficulty.
The SpaceX IPO information is pretty interesting already. Sources of revenue, a drastically upped valuation from $46 billion to $74 billion, and of course hype, glorious hype, are all over the market.
Possible, in fact likely, clients for SpaceX already include NASA and the US Department of Defense. That’s big money, and SpaceX is in the box seat for this sort of business. There’s even a strategic factor in the US space competition with China. A further somewhat-babbled-about added possible interest is SpaceX freight going from “point to point” on Earth,
Starlink, the SpaceX satellite network, is another credible big earner. Satellite-based internet services are the major news in this sphere, although satellite services for airlines are also making news.
Tough call – Does the market understand SpaceX?
Companies which deal in space tech are nothing new. Boeing, etc. are known factors in investment. This is very different. A company which is exclusively about space travel and space services is totally different in far too many ways.
The real issue for the market is its own understandable, but expensive, ignorance. What does the market know about space launches and new space ventures? Not a lot, in investment terms.
What can go wrong? What can go right? There’s nothing on the market to compare to SpaceX. This is not a bricks-and-mortar company. It’s not mainstream.
There are multiple technological elements, another potentially cost-based issue for SpaceX. If you consider the various ramifications of new tech in any market, let alone space, that’s likely to be an ongoing investment issue.
Then there’s Musk himself as both an asset and a liability. Some people break out in a rash at the mention of his name; others are true admirers. Perceptions of Musk are very much colored by editorials and personal opinions. That can and will sooner or later impact investments and stock prices, positively and negatively. The guy can’t stay out of the limelight for long, even if he wants.
The current situation as it’s visible at the moment for the IPO is:
- A very hefty, upper-scale valuation of stock.
- Multiple streams of credible revenue and potential clients for SpaceX and Starlink.
- Absolutely nothing as benchmarks for comparison.
- A wide open and often unfriendly space race with China and in some cases Russia which could impact SpaceX.
- Risk issues for space ventures, notably the useless space junk around Earth which could trash missions and vehicles.
- A strong, if often vague and non-specific, push to commercial space mining and similar ventures SpaceX could serve.
- A general improvement in space tech from which SpaceX could benefit commercially over long and short terms.
Excuse the expression – Watch this space. It definitely won’t get dull, and it will be the first working version of a space-based investment giant in the market.