SpaceX shoots for the moon with $1.78tn IPO
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What is the main topic discussed in this episode?
Good morning from the Financial Times. Today is Wednesday, June 10th, and this is your FT News Briefing. The U.S. has launched new strikes on Iran, and SpaceX is asking investors to trust the process. Plus, spend it or save it? Ireland's grappling with its tax windfall.
There are big gaps in Ireland's infrastructure across the board that aren't in step with it standing as one of the richest countries in Europe. Really, it has a lot of ground to make up.
I'm Mark Filippino, and here's the news you need to start your day.
What recent events have escalated tensions between the US and Iran?
The U.S. military retaliated against Iran yesterday. It was in response to what Central Command called, quote, unjustified Iranian aggression. President Donald Trump said Iran shot down a highly sophisticated American Apache helicopter on Monday night. The price of oil jumped slightly after the U.S. attacks just north of $92 a barrel. The strikes by the U.S. marked a new test of the fragile ceasefire between the countries. American and Iranian forces have traded fire in and around the Strait of Hormuz since the truce took hold in early April.
How is Ireland managing its corporate tax windfall?
Somehow, they've avoided full-blown war.
Oh, hey, have you heard that SpaceX is going public on Friday? You probably can't escape the news, and it's hard to with such a massive valuation, nearly $1.8 trillion. Most of that price tag rests on SpaceX reaching some pretty ambitious goals. Do investors believe Elon Musk can pull them off? Here to discuss is the FT's venture capital correspondent, George Hammond. Hey, George. Hey, Mike. So SpaceX's lofty price tag hinges on some pretty risky projects. Tell me about those.
Yeah, so this is a rocket-making company that is seeking to expand its dominion into space. Musk has always been very clear that he wants to go and occupy Mars, ultimately. And the company is, in some senses, just one extensive bet on that project. So it's currently a rocket-launching business. It has a satellite business, Starlink. He has now appended to that a social media company, an AI business. And particularly the latter of those, the AI business, he believes is going to be the great revenue driver for SpaceX going forward. And it's really the part of the business that underpins this very, very lofty $1.8 trillion valuation. Let's just play devil's advocate here. What happens if SpaceX can't do all this?
There is a very real business at the core of SpaceX. They have a near monopoly on rocket launching. And Starlink has become a very, very successful part of the overall business as well. But combined, those contribute the bulk of what was around 18, 19 billion in revenues for the company last year. On the basis of today's valuation, It's 92 times that revenue figure, which is just astronomically far above big tech peers and others in the public markets. And if you're just looking at fundamentals there, analysts think that SpaceX is probably closer to a $780 billion company. That's a number from Morningstar. So that's a full trillion dollars off what it is going to list at. So I think that tells you to some degree the extent to which this listing is a bet on those moonshot aspirations that Musk has sketched out of occupying space, building a base on Mars, and becoming the dominant AI provider.
What have investors told you? Do they think SpaceX can pull all this off?
So investors, particularly in Silicon Valley, have this adage around Elon Musk that no one has ever lost money betting on Elon Musk. And that's not strictly speaking true. He has definitely had some blowups in his past and he has melded various of his entities together as a way of avoiding investor losses. So he's not totally got a Midas touch, but they have generally been borne out in that conviction that he is A safe bet. So investors in the private markets are very willing to believe Musk's dreams. Even so, there are some raised eyebrows at what is a valuation that is some way above its previous private market round, which was at 1.25 trillion.
George, the tech-heavy NASDAQ has been up and down over the past couple of days. Is that investor nervousness pre-SpaceX IPO?
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:02–0:42
2
What recent events have escalated tensions between the US and Iran?
0:42–1:13
3
How is Ireland managing its corporate tax windfall?
1:13–7:00
4
What ambitious goals does SpaceX have for its IPO?
7:00–8:36
5
What are the risks associated with SpaceX's lofty valuation?
8:36–11:52