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

Written by He Lanyi | Edited by Zhang Hongyi

Produced by Business Show

Recently, Musk's SpaceX, the most talked-about company, officially submitted its S-1 prospectus to the SEC.

The underwriter lineup behind this IPO is indeed luxurious, including Goldman Sachs, Morgan Stanley, and an consortium of 18 banks including Bank of America, Citigroup, and JPMorgan Chase, making it one of the largest underwriting groups in recent years. The company plans to raise $75 billion with a target valuation of approximately $1.75 trillion. Industry insiders say that if successful, this will become the largest IPO in global history.

As the absolute benchmark in the global commercial space sector and Musk's most imaginative business empire, SpaceX's attempt to go public with a trillion-dollar valuation has already surpassed the scope of an ordinary corporate listing and may become a major event that rewrites the global technology capital market landscape.

The reason why the global capital market's attention is focused here is that it involves the grand narratives of space exploration, interstellar colonization, and general artificial intelligence. If we strip away Musk's grand narrative fog, we will find that this is actually a company with extremely tear (disjointed) 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 technical barriers and profit potential, or is it a capital vehicle that relies on Starlink as its sole cash cow, crazy ( crazy ) supports its loss-making AI business, and props up its 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 'Ice and Fire' of Business Models: 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 superposition (superimposition) of multiple identities seems unable to allow the outside world and the market to make an accurate and fair business positioning of it.

According to SpaceX's prospectus disclosed by the SEC, revenue in the first quarter of this year increased by 15% year-on-year, 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 in the same period last year.

Among them, the space business segment had revenue of $619 million in the first quarter and an operating loss of $662 million. For the full year of 2025, SpaceX achieved 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 ended March 31, 2026, and the year ended December 31, 2025.

Specifically, SpaceX's current three major business segments present 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 and an operating profit of $4.423 billion, with a profit margin of nearly 39%. It can be said that it is currently the only business segment of SpaceX that can generate positive cash flow.

Second is SpaceX's aerospace business segment (including its rocket launch business), which can be described as an awkward (awkward) 'backdrop.' Although the Falcon 9 monopolizes the global launch market, accounting for more than 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 always faced the dilemma of high R&D investment and weak commercialization. In 2025, with annual revenue of $4.086 billion, the Starship's normalized R&D testing consumed more than $3 billion in funds annually, only able to maintain technical barriers without contributing any profits. This segment reinvests most of its revenue into R&D, meaning that for every $1 earned, nearly $0.74 is invested.

The last segment is SpaceX's AI business segment (including the xAI business, now renamed 'SpaceXAI'), which is also SpaceX's core AI business that it is heavily betting on. You could say it is the craziest 'money pit.' 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 earned by Starlink is not only completely swallowed 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 operation 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 cash, 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 severe losses. In 2025, SpaceX's full-year net loss was $4.94 billion. By the first quarter of 2026, with a surge in AI capital expenditures (reaching $7.7 billion in a single quarter), losses further expanded.

More alarmingly, Starlink, as the sole revenue conduit, is not invincible in terms of its cash-generating ability. 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 price-for-volume strategy, 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-burning rate, SpaceX's cash flow will face severe tests.

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 to continuously subsidize another large loss-making business for long-term operation. Its AI business has not delivered corresponding commercial value but has consumed most of the company's cash flow, which is the company's core operational defect.'

In recent years, we have often talked about AI tech narratives. SpaceX is entirely built on Starlink's continuous blood transfusion and continuous large losses, without 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: A Value Anchor or a Bubble Source?

Faced with a valuation target of $1.75 trillion, or even challenging $2 trillion, Wall Street's divisions have become public. This valuation means that SpaceX's price-to-sales ratio (P/S) is as high as approximately 100 times, 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 buying rockets and satellites but also 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 extremely 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,' said, SpaceX's valuation is highly dependent on Musk and contains extreme uncertainty. Once Starship test flights are hindered, 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 hiding capital risks that ordinary investors cannot avoid.

Combining the equity information in the prospectus, first, from the perspective of equity and company control, SpaceX adopts a typical dual-class share structure design, completely achieving 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 has 10 votes, while each Class A share has only 1 vote, Musk will continue to hold an absolute 85.1% voting right in the company after the IPO.

In other words, Musk personally 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 non-voting or low-voting common shares.

This control structure means that SpaceX, from the very beginning 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 power, or decision-making power. The company does not need to establish an independent director committee or shareholder supervision mechanism. Even if strategic mistakes, 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 that SpaceX's governance structure is an extreme disregard for public shareholders' rights and completely does not comply with the corporate governance norms of 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 (concerned) valuation pricing, industry insiders told Business Show that it is almost detached from the company's fundamentals and entirely supported by AI + space concept hype, with obvious bubble characteristics.

According to the industry valuation benchmarks publicly disclosed by the NYSE 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 as high as 94 to 108 times, far exceeding the reasonable valuation range of the industry, with a valuation premium more than three times the industry average.

Based on SpaceX's real financial data, profitability, and business growth rate, Aswath Damodaran calculated through a fair valuation model that, excluding all concept premiums and personal IP premiums, SpaceX's fundamental reasonable valuation is only $1.22 trillion, 30% lower than its IPO target valuation, with over $500 billion in valuation coming entirely from concept bubbles 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 venture capital research institutions, jointly released a report stating that SpaceX does not have a profit system to support a trillion-dollar valuation. Its AI business continues to incur large losses, its commercial space business cannot be monetized, and its Starlink business 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 overdraft (anticipated) future 5 to 10 years of performance growth space. After the listing, issues such as valuation corrections, stock price fluctuations, 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 support AI, uses Musk's personal charm to endorse the valuation, and attempts to build 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 glorious halos, industry analysts believe that the underlying risks of this trillion-dollar draft (prospective) listed company still exist.

First, the business structure is fatally imbalanced, with a high risk of reliance on a single cash flow. Starlink's user growth and unit profitability have reached their ceilings, with ARPU continuing to decline, unable to sustain the AI business's massive losses in the future. The commercialization of the AI business is still far away. Second, the valuation bubble is severe, with insufficient secondary market Carrying capacity (capacity). The ultra-high valuation detached from fundamentals will face valuation correction pressure after the listing. Institutional funds may profit and exit, leading to valuation shrinkage and directly triggering significant stock price fluctuations. Third, the corporate governance structure is imbalanced, without any risk checks and balances. Musk alone controls the company, and shareholders' interests cannot be guaranteed. The enterprise operates in a completely unsupervised and unchecked state. Fourth, industry competition and technological implementation fall short of expectations. Increased competition in the low-orbit satellite internet industry, delayed commercialization of Starship R&D, and intensified AI industry competition further compress SpaceX's profit imagination space.

From a commercial perspective, the capital market can pay for technology, the future, and innovation but will never pay for continuous losses, structural imbalances, valuation bubbles, and authoritarian governance in the long term. SpaceX relies on Starlink to fill the AI's loss hole and props up a trillion-dollar valuation with space concepts, ultimately violating many commercial laws.

Stripping away the halo and returning to the three core commercial logics of profitability, governance, and valuation, for SpaceX to truly support a trillion-dollar market cap, the first issues it needs to address are not Mars colonization or AI technological breakthroughs but the most fundamental commercial problems, such as stopping irrational cash burning, achieving AI business self-sufficiency, balancing the business structure, returning to a reasonable valuation, safeguarding public shareholders' rights, and establishing a standardized governance system for listed companies.

In this trillion-dollar capital feast, whether SpaceX is a ticket to the stars and seas or a bubble passed around like a hot potato, perhaps only time can tell. 「End」