Why SpaceX is Worth $700 Billion, Not $1.75 Trillion

If SpaceX pulls off what is widely described in the news media as the “largest IPO in history” next month, it will be a testament to Elon Musk’s skills as a salesman. The company’s newly public IPO prospectus makes it plain that SpaceX is largely a telecom firm with a rocket launch business on the side, with future growth coming from a cloud computing arm. Valued in line with its peers in those businesses, it would probably be worth no more than $700 billion (and that’s being generous).

In other words, anyone who buys into the company at the vaunted $1.75 trillion valuation (that’s at least what bankers are hoping SpaceX will achieve) is paying $1 trillion for the promise that SpaceX will overcome major technological hurdles and launch an orbital cloud-computing service, as well as industrialize the moon. It’s admirable Musk is shooting for the stars—but investors need to know what they’re getting into.