Editor's note: Elon Musk has just launched SpaceX's long-awaited IPO... But before you start buying shares, it's important to know if the company is worth investing in. Rob Spivey – director of research at our corporate affiliate Altimetry – has combed through a recently published document to determine just that. And he's using his firm's Uniform Accounting approach to estimate the company's future value. In today's Masters Series, adapted from the June 8 and 9 issues of the free Altimetry Daily Authority e-letter, Rob breaks down SpaceX's business and shares the good and bad regarding the biggest IPO ever...
Here's What We Know About History's Biggest IPOBy Rob Spivey, director of research, Altimetry The biggest initial public offering ("IPO") of all time is here... Elon Musk's SpaceX began trading yesterday morning under the ticker SPCX. In preparation, the company published its investor prospectus (called an S-1 form) at the end of May. And that means we can finally get a closer look at SpaceX's operations. Musk is a controversial figure, to say the least. And there tends to be a lot of hype surrounding anything he's involved with. The SpaceX IPO is no exception. We'll kick things off with a detailed look at SpaceX's three segments... what each business does... how profitable they are (or aren't) today... and how much they should be worth in the future. Let's start with the company's namesake... SpaceX's "space" segment does exactly what you might expect – it launches objects into space. Musk personally created this legacy business back in 2002. So it has been running for more than two decades. Today, it boasts revenue of about $4 billion. You might have seen some of SpaceX's satellite test launches on the news. It also plays an important role in helping other organizations launch into space. Last year, SpaceX facilitated 11 of the 12 medium and heavy launches on behalf of the National Security Space Launch (part of the U.S. Space Force). And it provided the launch site and services for all five of NASA's trips to the International Space Station. The space business is essentially a "toll operator" for getting things and people into orbit. SpaceX is the dominant player in this market and was responsible for more than 80% of all U.S. launches in 2025. And as a toll operator, SpaceX benefits from, well, more stuff in space. That said, this is a pretty asset-heavy business. It has to operate complex rockets and keep its launchpads ready for takeoff. This means it needs to fund significant, ongoing research and development (R&D) and capital expenditures just to stay in the game. SpaceX has turned its space segment into a decent business. We often talk about companies (or individual segments) in terms of Uniform return on assets ("ROA"). Think of this as a company's profitability. For most businesses, a 5% Uniform ROA is their breakeven level. And the corporate average across the entire market is 12%. The space segment generated abysmal 1% returns in 2023. So it wasn't profitable. But that number rose to 12% in 2025. And as it handles more launches every year, our models project profitability reaching 17% this year.
At the same time, the global space-launch market is set to double or triple by 2030. For SpaceX to keep its market share, it'll have to grow its asset base by about 30% per year. Take a look... 
As we noted earlier, this is a mature business. So it should earn a decent profit. And as SpaceX launches more things into space, it makes sense that the space segment would become a bit more profitable. We took these ROA and asset-growth estimates and worked backward to arrive at a valuation for the business. We'll cover this process more in-depth tomorrow... But for now, all you need to know is that the space segment is worth about $125 billion based on our calculations. Space is a pretty steady segment. But the rest of the company isn't quite as straightforward... Earlier this year, SpaceX acquired another one of Musk's businesses – xAI... Musk launched xAI in 2023 to compete with AI model developers like OpenAI and Google parent Alphabet (GOOGL). It owns Musk's competing AI model, Grok. It also owns the social media network X (formerly Twitter), which Musk bought in 2022. But mostly, the AI business consists of two massive AI data centers called Colossus and Colossus II. We'll be blunt... This business is a money pit. The social media landscape has been challenging. Several advertisers pulled out after Musk bought the platform. And Grok hasn't caught on the way Musk hoped. As of the end of 2025, it had just a 3% market share for all AI models. This segment only generated $3.2 billion in revenue last year. And new data centers don't come cheap. No wonder its Uniform ROA has been deeply negative for three years running. Its "best" year was 2024, at negative 9%. Last year, returns fell to negative 18%. To claw its way out of the red, the AI segment is renting out space at its data centers. It signed a deal leasing space to competitor Anthropic for $1.25 billion per month (that's $15 billion per year). That cash is expected to help improve returns to a "mere" 5% loss by 2027. AI is SpaceX's biggest question mark. It's trying to compete with the biggest players on several fronts. But we can expect it to stay unprofitable for at least a few years. That said, we have no doubt that the AI unit will keep growing. Its asset base was already up a staggering 95% last year. We're short enough on data-center capacity that AI companies will pay basically any price. We expect roughly 35% annual asset growth in the future. It all comes down to profitability. Considering SpaceX owns huge data centers, runs a social media network, and is developing a large language model, the business is clearly trying to be a hyperscaler like Meta Platforms (META), Alphabet, and Microsoft (MSFT). Those are all great businesses... They averaged a 29% Uniform ROA last year. So that's what we're giving SpaceX credit for. If it does become a hyperscaler that can compete with today's biggest players, the AI business could be worth as much as $600 billion. Check it out... 
That seems like a best-case scenario for this segment. It will come down to how fast the company can keep growing and signing more customers for its data centers. Finally, let's look at the company's cash cow... You probably know the "connectivity" business by its other name – Starlink. Starlink has roughly 10,000 active satellites. Through that network, it offers satellite-based broadband and cellular subscriptions for folks in 164 countries. It has amassed more than 10 million customers already. It also brings in more revenue than the other two segments combined, at $11.4 billion. But the investor prospectus notes that it has a $1.6 trillion addressable market. That's basically the value of the entire telecom industry. We'd pump the brakes on that number, though. In the developed world, telecom companies already provide high-speed broadband at competitive prices. Starlink isn't going to displace the Comcasts of the world anytime soon. Where Starlink wins is everywhere else. Rural areas and developing markets are underserved because it's expensive to lay fiber-optic cables... not to mention a logistical challenge. Satellites don't have that issue. The connectivity segment has high "operating leverage." Once it launches satellites into space, it doesn't have to spend much more to add each new customer. In other words, the more customers the business has, the more profitable this segment will become... Right now, the company has a 90% market share in satellite Internet... and that market is expected to reach $50 billion over the next five years. The cellular market is expected to be around the same, at $46 billion. Starlink brought in more than $4 billion in revenue in 2023. Returns were already a respectable 15%. And they doubled to 30% last year. On its current trajectory, it'll end up with nearly $90 billion of the telecom market. That's enough for the business to grow 34% annually, with profitability rising above 60% by 2027... 
This is SpaceX's most profitable segment by far. And right now, it's the one keeping the lights on for the rest of the company. At those levels of profitability and growth, this segment would also be worth $600 billion. The connectivity business is already well on its way to justifying that valuation. All told, these segments should be worth a combined $1.3 trillion... SpaceX has a monopoly on U.S. space launches. Connectivity is breaking into a $1.6 trillion market in a way nobody else can replicate today. Both are helping fund the AI business through its unprofitable phase. That's not the full story, though. Tomorrow, we'll put it all together... valuing SpaceX as a complete business using two of our favorite Uniform Accounting tools. Be sure to check back. Regards, Rob Spivey
Editor's note: SpaceX has now gone public, and everyone has fixed their eyes on the stock. But behind the scenes, a change to major stock market rules could impact millions of investors. Legendary investor Whitney Tilson has noticed this shift. And he says that the trend of large companies going public could potentially increase the risk in your portfolio. If you're holding a major index, you need to hear Whitney's Emergency Briefing. Click here to learn more. |
