Zhou Hang: How much is SpaceX really worth?

Author: Zhou Hang

SpaceX's valuation before and after the IPO may be overestimated by $1.25 trillion.

This is not to deny the greatness of SpaceX. On the contrary, anyone who seriously discusses SpaceX must first acknowledge: it may be one of the greatest industrial companies of the past 50 years.

However, the greatness of a company and whether a stock is worth buying at any price are two completely different matters.

SpaceX can simultaneously be "the greatest industrial entity of the 21st century" and "a severely overvalued investment target." These two things are not in conflict.

■ First, acknowledge that it is indeed great

Any honest discussion about SpaceX's valuation must start with one sentence: it is the most successful industrial company of the past 25 years, without exception— even more successful than Tesla. This is not hyperbole; it is a fact in engineering economics.

Tesla disrupted a 150-year-old mature industry— the automotive industry. Its competitors are Mercedes, Ford, and Toyota. These competitors are certainly not weak, but they are commercial companies, without the backing of national interests, without political barriers, and the essence of competition is product, brand, and supply chain.

SpaceX disrupted a 60-year-old national monopoly industry— aerospace. Its competitors are NASA, Roscosmos, ESA, and CNSA. This is a completely different level of difficulty: higher engineering thresholds, greater capital density, more complex regulations, and deeper binding of national interests. When Musk founded SpaceX in 2002, the entire aerospace industry was essentially an extension of national missions; commercial companies were not considered capable of making rockets, let alone making rockets cheaper than the government.

More than 20 years later, SpaceX has cut launch costs from $54,500/kg during the Space Shuttle era to $1,500/kg— a 36-fold decrease. It now launches 165 times a year, more than all other countries and all commercial players combined. It has created the first truly reusable rocket in human history, with a single Falcon 9 first stage flying 32 times and a success rate of over 99%. It has built the world's first global satellite internet— with coverage for over a billion users, becoming a decisive strategic asset on the first day of the Ukraine war.

Tesla will still face fierce competition from Chinese electric vehicles in 2025; SpaceX's share of the global commercial launch market is close to monopoly.

SpaceX is a great company, possibly the greatest industrial company on Earth in the past 50 years. Any criticism regarding its valuation must first acknowledge this fact.

■ What does $1.75 trillion mean?

Let's look at a comparison:

* Total market capitalization of Boeing + Lockheed + Northrop + RTX + GD. SpaceX's valuation is 2.5 times that of these five companies combined.

In other words, the valuation of SpaceX alone exceeds the entire annual GDP of Mexico, surpassing that of Tesla + Berkshire, and is 2.5 times the total market capitalization of all traditional aerospace competitors.

This in itself is not a problem— great companies should have great valuations. But this 2.5 times ratio means the market is not pricing it as a "space company" or as an "industrial company." The market is pricing it according to a mixed paradigm that is closer to "sovereign asset + AI era infrastructure + story premium."

Is this valuation reasonable?

If we list all of SpaceX's current businesses and carefully calculate how much revenue it can generate by 2030, we can estimate each line under a reasonably optimistic scenario:

If SpaceX achieves revenue of $50-80B by 2030, the corresponding EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization, which can be roughly understood as the operating cash profitability of the company's main business) would be approximately $20-35B (at a 40% margin, which is already a very optimistic figure).

Using a SaaS diversification standard of 25-35 times EV/EBITDA multiple— this is already a top-tier valuation for tech companies— SpaceX's "reasonable valuation" range in 2030 is $500B to $1.2T.

Taking the conservative anchor point of $500B (i.e., estimating all 2030 businesses under reasonable rather than crazy assumptions), the market is pricing it at $1.75T.

The difference: $1.25T.

This portion of the difference cannot be explained by any standard financial model. It is not the result of DCF (Discounted Cash Flow), nor is it derived from P/S ratios, nor is it the result of comparable company references— all these methods do not yield $1.75T.

This difference does not appear out of thin air. It has three real sources:

First source: long-term vision premium. If Starship operates stably between 2027-2030, launch costs may drop to $200/kg or even lower. The release of capacity by 30 times— enough to support the birth of new businesses (in-orbit data centers, lunar commerce, deep space robotics). Anthropic has publicly expressed its willingness to "pay for space GW-level computing power." If this part of the story comes true, by 2040, the total market for SpaceX plus new businesses may reach $200-500B/year. This upper limit is indeed enormous— so it is reasonable for the market to leave room for a "vision premium."

Second source: sovereign asset + strategic position premium. SpaceX is no longer just a commercial company; it is a national strategic asset of the United States. $22B in government contracts, HLS lunar landing, NRO secret reconnaissance constellation, Golden Dome missile tracking— these bind SpaceX into the U.S. national security system. In today's rapidly dividing international communication order (China circle/U.S. circle/third parties), Starlink automatically gains "soft sovereignty" in all markets it can serve. The monetization of this status will take over 10 years to fully manifest, but the premium is real.

Third source: retail investors' yearning for heroic narratives + Musk's personal cult. This is the hardest to quantify, but anyone familiar with capital markets knows its power. Musk has 200 million followers on the X platform; he is a variable in market capitalization. The story of SpaceX— a private company sending people to Mars, establishing a global internet, making humanity a multi-planetary species— is the most heroic business story of the past 50 years.

Retail investors are not buying EBITDA; they are buying a ticket to participate in history.

The first two premiums are "real but slow"; the third premium is "big but fragile." The current valuation of $1.75T bets on all three being valid and without issues. This is a difficult combination to maintain.

What will happen after the IPO?

Assuming SpaceX completes its IPO in the second half of 2026, the next 3-5 years are likely to unfold as follows:

Scenario A: Valuation solidifies (probability ~25%). Starship V3 successfully launches in 2027, enters stable operation in 2028, and the first GW-level space computing contract is finalized in 2028. Lunar commerce progresses according to NASA's timeline. Starlink's growth slows, but the aviation + maritime + D2C segments replace the slowdown in the residential market. $1.75T in this scenario "begins to look cheap"— the market will revalue it to $2-3T.

Scenario B: Valuation remains stable with fluctuations (probability ~50%). The speed of Starship's realization is slower than expected— if it achieves a 20% success rate with 5 out of 25 test flights in 2025, and if this realization rate continues in 2026-2027, true maturity for V3 may not come until 2029-2030. Starlink's growth rate falls back to +20% per year, and the xAI-Anthropic agreement is real cash flow but lacks a follow-up major contract. The market will find that "the narrative is faster than reality," and the valuation will fluctuate between $1.2T - $1.8T for 3-5 years. This is the most probable scenario.

Scenario C: Valuation is rediscovered (probability ~25%). Starship continues to be delayed, xAI falls significantly behind in AI competition, and personal risk events for Musk (health, reputation, politics) trigger. Emotional premiums quickly shrink. The market will reprice using financial models— the valuation will drop back to the $800B-$1.2T range, equivalent to "the reasonable valuation that an excellent industrial company should have." This scenario is actually good for long-term holders— but for retail investors who buy after the IPO, it means a 30-50% paper loss.

Probability-weighted = 0.25 × upside + 0.50 × stable + 0.25 × downside ≈ Expected value $1.3-1.5T, lower than the IPO offering price of $1.75T.

By weighting the three probabilities, the expected midpoint of SpaceX's valuation in the next 3-5 years is about $1.3-1.5T— lower than the current IPO offering price.

In layman's terms: Buying at $1.75T on IPO day has a negative expected return over 5 years. This is the inevitable result of weighting the three scenarios by probability; in the most probable scenario, you won't see a return; in the worst scenario, you lose 30-50%; only in 1 out of 4 scenarios do you make money.

In the words of Charlie Munger: this is not a bet worth taking.

■ A note for those planning to buy on IPO day

SpaceX is a great company, but a great company does not mean its stock should be bought at any price. These two matters should not be conflated.

Tesla was also considered by many to be "worth buying at any price" at the end of 2021— at that time, its market capitalization was $1.2T. Then, over the next two years, Tesla fell 70%, from $1.2T to $400B. This was not because Tesla became a bad company— it is still an excellent electric vehicle company. It was because the price had moved too far ahead of the fundamentals.

SpaceX's current situation is highly similar to Tesla's at the end of 2021— possibly even more dangerous, because SpaceX's "vision premium" is higher, the story is grander, and retail participation may be deeper.

If you truly believe in SpaceX's long-term vision and are willing to hold for over 10 years, then buying at the IPO price may not be a problem— 10 years from now, this company will likely be worth more. But if you expect to "double your investment in 1-3 years," then the math is not on your side.

A more rational strategy is:

• Do not chase high on IPO day. The premium is usually the highest on the first day of any super IPO.
• Wait for at least one of three things to happen: Starship V3 achieves stable operation, the first GW-level space computing contract is secured, or the stock price falls back below $1T.
• If you must buy now, limit your position. Do not treat it as a "sure bet"— it is not. It is a "meaningful long-term +/- 30% uncertainty."

■ A great company can also be an expensive stock

The greatness of a company is a fact; whether a stock's price is reasonable is mathematics. Facts do not change; mathematics changes every day. In SpaceX's current valuation structure, financial models can only explain half; the other half is market sentiment + sovereign status + personal cult— this part does exist, but it is fragile.

After the IPO, one thing will happen: retail investors will start measuring this company using quarterly earnings. The first quarterly report, the second, the third— each one will prompt the market to reconcile the "story" with "reality." This reconciliation process is usually unfriendly to short-term valuations.

If you are buying the company— a great industrial entity, the human infrastructure after Starship, a sovereign asset— then the IPO price is just a point in a 20-year marathon, and there is no need to get hung up on it.

If you are buying the story— participating in history, following heroes, for the sake of our eventual status as a multi-planetary species— then please acknowledge that this is consumption, not investment. Consumption can be expensive, but you need to know what you are doing.

A company can be number one in the world, and its stock can simultaneously be overvalued by $1.25 trillion. Both of these statements are true, but they must be viewed separately, and you must distinguish whether you are buying the company or the story.