Is the Trillion-Dollar Valuation a Commercial Space Endeavor or a Capital Bubble?

By He Lanyi | Edited by Zhang Hongyi

Produced by Business Show

Recently, Elon Musk's SpaceX, which has garnered significant attention, officially submitted its S-1 prospectus to the SEC.

The lineup of underwriters behind this IPO is indeed impressive, including Goldman Sachs and Morgan Stanley, along with 18 banks such as Bank of America, Citigroup, and JPMorgan Chase, forming one of the largest underwriting syndicates in recent years. The company plans to raise $75 billion with a target valuation of approximately $1.75 trillion. Industry insiders claim that if successful, this will become the largest IPO in global history.

As the absolute benchmark in the global commercial space sector and Elon Musk's most imaginative business empire, SpaceX's push for an IPO with a trillion-dollar valuation has already surpassed the scope of an ordinary corporate listing and may become a significant event reshaping the global technology capital market landscape.

The reason why the global capital market's attention is entirely focused here is that behind it lies a grand narrative of space exploration, interstellar colonization, and artificial general intelligence. If we look past Elon Musk's grand narrative, we will find that this is actually a company with extremely disparate financial data.

We cannot help but ask: Is SpaceX, labeled by the outside world as an AI technology company and a leader in commercial space, a hardcore technology enterprise with both technological barriers and profit potential, or is it a capital vehicle relying on Starlink as its sole cash cow, crazy (Note: This Chinese word means 'frantically' and is kept as is for emotional intensity, but for a strict translation, it could be replaced with ' crazy 地' or omitted if context allows) supplying its loss-making AI business and propping up an ultra-high valuation with concepts? Moreover, under Musk's absolute authority, will ordinary investors board the 'spaceship' to the stars and seas, or will they become the ones footing the bill for this trillion-dollar gamble?

01

The 'Two Extremes' of the Business Model: Starlink's Profits Cannot Fill the AI Black Hole

For a long time, SpaceX's external business labels have been extremely vague, such as space exploration service provider, Starlink satellite internet operator, AI large model and space computing technology company, and interstellar aerospace technology developer. The overlapping identities seem unable to allow the outside world and the market to make an accurate and fair commercial positioning of it.

According to the SpaceX prospectus officially disclosed by the SEC, revenue in the first quarter of this year increased by 15% year-on-year, rising from $4.07 billion a year ago to $4.69 billion. However, the net loss in the first quarter was $4.28 billion, far exceeding the $528 million loss in the same period last year.

Among them, the space business segment had revenue of $619 million in the first quarter, with an operating loss of $662 million. For the full year of 2025, SpaceX reported consolidated revenue of $18.674 billion, an operating loss of $2.589 billion, and an adjusted EBITDA of $6.584 billion.

SpaceX stated that its aerospace and connectivity business segments contributed the vast majority of consolidated revenue for the three months ending March 31, 2026, and the year ending December 31, 2025.

Specifically, SpaceX's current three major business segments exhibit distinct survival states.

First is the connectivity business segment driven by Starlink, which is SpaceX's only 'cash cow.' In 2025, Starlink contributed $11.387 billion in revenue, with an operating profit of $4.423 billion, a profit margin of nearly 39%. It can be said that it is currently the only business segment capable of generating positive cash flow for SpaceX.

Next is SpaceX's aerospace business segment (including its rocket launch business), which can be described as an awkward 'background board.' Although the Falcon 9 monopolizes the global launch market, accounting for over 80% of the global commercial launch market share, the space segment's revenue in 2025 was only $4.086 billion, with an operating loss of $657 million.

More critically, it has consistently faced the challenge of high R&D investment and weak commercialization. In 2025, with annual revenue of $4.086 billion, the Starship's regular R&D testing consumed over $3 billion annually, merely maintaining technological barriers without contributing any profits. This segment reinvests most of its revenue into R&D, meaning that for every dollar earned, nearly $0.74 is reinvested.

Finally, there is SpaceX's AI business segment (including the xAI business, now renamed 'SpaceXAI'), which is SpaceX's core AI business that it is heavily betting on. You could say it is the most 'money-hungry' segment. Data shows that in 2025, the AI segment's revenue was only $3.201 billion, but its operating loss was as high as $6.355 billion. In the first quarter of 2026 alone, it achieved revenue of $818 million, with an operating loss of $2.469 billion and an adjusted EBITDA loss of $609 million.

This means that every cent of profit painstakingly earned by Starlink is not only completely consumed by the AI business but also requires additional funds to fill the gap.

In 2025, SpaceX as a whole achieved revenue of $18.674 billion, maintaining a 33% year-on-year growth rate, seemingly sustaining a high-growth trajectory. However, the net loss for the full year reached $4.94 billion, with the overall operations in a state of continuous bleeding. When we break down the three core business segments, the polarization of profits and losses becomes evident.

This also confirms the business model of 'single business generating revenue, all business lines burning cash.'

From a financial perspective, SpaceX is using its most profitable satellite internet business to support an AI dream with an extremely long payback period and currently significant losses. In 2025, SpaceX's full-year net loss was $4.94 billion, and by the first quarter of 2026, with a surge in AI capital expenditures (reaching $7.7 billion in a single quarter), the losses further widened.

More alarmingly, Starlink, as the sole revenue conduit, is not immune to risks in its revenue-generating capacity. Data shows that Starlink's average revenue per user (ARPU) has declined from $99 in 2023 to $66 in the first quarter of 2026.

This strategy of trading price for volume, while expanding the user base, has directly eroded its long-term profit margins. Once Starlink's profit growth fails to outpace the AI's cash burn rate, SpaceX's cash flow will face severe challenges.

Michael Wilson, a senior Wall Street tech industry analyst and chief researcher of Morgan Stanley's tech sector, clearly stated in a joint interview with The Wall Street Journal and Bloomberg: 'SpaceX's current business logic completely violates the commercial growth patterns of tech companies. No trillion-dollar market cap company can rely on a single business segment to continuously subsidize another significantly loss-making business segment for long-term operation. Its AI business has not delivered corresponding commercial value but has consumed the vast majority of the company's cash flow, which is the company's most core operational defect.'

Over the years, when we talk about AI tech narratives, SpaceX is entirely built on Starlink's continuous blood transfusion and sustained significant losses, lacking any independent profitability or self-sufficiency. Once Starlink's business growth peaks, the entire company's cash flow system will face the risk of collapse.

02

Behind the Trillion-Dollar Capital Valuation: Is It a Value Anchor or a Bubble Source?

Faced with a valuation target of $1.75 trillion, or even challenging $2 trillion, divisions on Wall Street have become public. This valuation implies a price-to-sales (P/S) ratio of approximately 100 times for SpaceX, far exceeding that of any mature tech giant.

Industry analysts generally believe that SpaceX's valuation includes a significant 'Musk premium.' The market is not just paying for rockets and satellites but also for Elon Musk's past myths and the infinite imagination of the future narrative of space AI computing power. SpaceX depicts a grand total addressable market (TAM) in its prospectus: as high as $28.5 trillion, with the vast majority coming from AI enterprise applications and space computing power.

However, this valuation logic is highly fragile. If we strip away the future fantasies of the AI business and look only at the current financial fundamentals, SpaceX's high valuation lacks sufficient support. As Aswath Damodaran, the 'Father of Valuation,' stated, SpaceX's valuation is highly dependent on Musk and contains significant uncertainty. Once Starship test flights encounter obstacles, Starlink's ARPU continues to decline, or AI commercialization falls short of expectations, the secondary market is highly likely to experience a sharp valuation correction.

Apart from the imbalanced operational fundamentals, SpaceX's trillion-dollar valuation proposed in this IPO and its extremely concentrated equity control structure have become another core point of controversy in the capital market, also harboring capital risks that ordinary investors cannot avoid.

Combining the equity information from the prospectus, first, from the perspective of equity and corporate control, SpaceX adopts a typical dual-class share structure design, completely realizing Musk's absolute control over the company without any external checks and balances.

According to the equity structure disclosed in the SEC prospectus, Elon Musk currently holds 12.3% of SpaceX's Class A shares and 93.6% of Class B shares. Since each Class B share carries 10 votes, while each Class A share carries only 1 vote, Musk will continue to hold an absolute 85.1% voting rights in the company after the IPO.

In other words, Musk directly holds 42% of SpaceX's equity and, through the super-voting rights design, controls 85.1% of the company's voting power. Public investors and institutional investors hold ordinary shares with no or low voting rights.

This control structure means that SpaceX, from the moment of its listing, is Musk's personal business empire: all strategic decisions, business layouts, R&D investments, and fund allocations are solely determined by Musk. The board of directors and external shareholders have no veto power, supervision rights, or decision-making power. The company does not need to establish an independent board committee or shareholder supervision mechanism. Even if strategic errors, operational losses, or related-party transactions occur, external investors have no way to intervene.

The Alliance of American Public Pension Funds, Fidelity Investments, and other leading institutions publicly stated in the Financial Times, directly pointing out that SpaceX's governance structure is an extreme disregard for public shareholders' rights and completely does not comply with corporate governance norms for listed companies. Investors can only bear the risks of operational losses and valuation fluctuations but cannot enjoy any shareholder decision-making rights.

Regarding the most followed (Note: ' followed ' means 'concerned' or 'focused on' and is kept as is for emotional intensity, but for a strict translation, it could be replaced with 'concerned' or omitted if context allows) valuation pricing, industry insiders told Business Show that it is almost detached from the company's fundamentals, entirely supported by hype around the AI + space concepts, with obvious characteristics of a bubble.

According to the industry valuation benchmarks publicly disclosed by the New York Stock Exchange and Nasdaq, traditional commercial space companies have an average price-to-sales ratio of only 1.5 to 2.5 times, while global leading profitable AI tech companies maintain a price-to-sales ratio of 25 to 40 times. Based on SpaceX's target valuation of $1.75 trillion, its price-to-sales ratio reaches 94 to 108 times, far exceeding the reasonable valuation range for the industry, with valuation premiums exceeding the industry average by more than three times.

Based on SpaceX's real financial data, profitability, and business growth rate, Aswath Damodaran calculated through a fair valuation model that, excluding all conceptual premiums and personal IP premiums, SpaceX's fundamental reasonable valuation is only $1.22 trillion, undervalued by 30% compared to its IPO target valuation, with over $500 billion in valuation coming entirely from a conceptual bubble without fundamental support.

From the perspective of industry capital patterns, the current global capital market's pursuit of SpaceX's valuation is entirely driven by emotions and FOMO (fear of missing out) panic investing, rather than value investing. PitchBook and CB Insights, global top-tier venture capital research institutions, jointly released a report stating that SpaceX lacks a profit system to support a trillion-dollar valuation. The AI business continues to incur significant losses, the commercial space business cannot be monetized, and the Starlink business's growth has peaked. These three core negative factors will gradually materialize after the listing.

The report warns that the current high valuation has already prematurely priced in future growth over the next 5 to 10 years. After the listing, issues such as valuation corrections, stock price volatility, and bubble bursts are highly likely to occur. If ordinary investors blindly enter the market, they will face significant investment loss risks.

03

Underlying Crises Beneath the Halo

SpaceX's listing is destined to be the most dazzling moment in the global capital market in 2026. It uses Starlink's profits to fuel AI, leverages Elon Musk's personal charm to endorse its valuation, and attempts to construct a grand closed loop from Earth to Mars, from connectivity to computing.

It also bundles the concepts of aerospace technology, satellite internet, and artificial intelligence, three popular sectors, to attempt to leverage top-tier capital and create a capital vehicle with an ultra-high valuation.

However, rationally speaking, stripping away all the glamorous halos, industry analysts believe that the underlying risks of this trillion-dollar draft (Note: ' draft ' means 'proposed' or 'planned' and is kept as is for context, but for a strict translation, it could be replaced with 'planned' or omitted if context allows) listing company still exist.",