Chapter 1: What is SpaceX and why is it significant?
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Pushkin. Markets, ladies and gents, are heading into a new dimension. They are heading into space, led by that guy again, Elon Musk. Investing in space as a big theme has been around for a while, but Musk is really taking it up a notch because he's planning to list one of his companies, SpaceX, on the stock market in the States.
And he reckons it's worth, get this, $1.75 trillion, trillion with a T, which would make it one of the most valuable companies on Earth and indeed in the known universe. Now, you take a little look at the electric vehicle slash robot maker Tesla, which is Musk's other big thing, and you wonder what gives him so much confidence in his ability. That stock's down by about 30% since November.
But the launch, get it, of SpaceX is happening. It will be impossible to avoid, and it will be a big test of whether investors are up for hype and promises and whether they really want more Elon Musk in their lives. Today on the show, will this thing fly? This is Unhedged, the markets and finance podcast from the Financial Times. I'm Pushkin.
I'm Katie Martin, a markets columnist here at FT Towers in lovely sunny London. And I'm joined down the line from New York City by my usual fellow astronaut, Rob Armstrong. Rob, say hello.
Greetings from space.
But we also have, all the way from San Francisco, a genuine FT legend, a stalwart, Richard Waters, known affectionately around these parts as Muddy. You're a real authority on all things big tech and Silicon Valley, and it's very early over there. So, Richard, thank you so much for coming on today.
Well, it's very nice to be with you. And by the way, I should say, I'm not in San Francisco. I'm in San Diego today. I'm in the FT satellite office.
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Chapter 2: How does Elon Musk's confidence affect SpaceX's valuation?
So, look, tell us, let's start from basics here. For normal people, what is SpaceX? Where does it fit in this grand Elon Musk universe where everything has an X in it?
I think the way we should think about SpaceX as a stock is it's going to be Elon Musk's kind of field of dreams part two. Tesla was an electric car company that turned into many other things. SpaceX is a rocket company that is turning into other things before our eyes. It started out as an incredibly successful, the first private company to put a rocket into orbit. It's an extraordinary thing.
And Musk is ferrying astronauts to the International Space Station. Before that, the U.S. relied on Russian rockets. So Musk is the U.S. space program in many ways, or became it. And then, you know, through his Falcon rockets, he basically established this incredible lead and cost in getting payloads into orbit. So he is the global workhorse for getting anything into orbit.
Extraordinary, absolutely extraordinary.
So like SpaceX mushed together with XAI, which is his artificial intelligence grok thing. Tell me how that makes sense.
skipped over part two, part two, was putting Starlink satellites, tens of thousands of satellites into orbit. This is now two thirds of SpaceX revenue. I mean, it's an incredibly successful thing. He's got it way ahead of the rest of the industry.
Every other business and every other country wants to put up a network, a global network of communications satellites because they don't all want to be dependent on Elon, which they are at the moment. So that was step two. Step three is let's kind of clutch this thing together with, as you say, XAI, which is Musk's
money pit of an AI company, which has also been clutched together with X, the former Twitter. And let's put it all together and call it, well, what do we call it? And that's the amazing thing here. I've had people say to me, this is some new style, vertically integrated Space conglomerate for the 21st century or something, I don't know. But you can start to see some rationale.
You can say, well, let's put data centers into space and generate AI in space. And hey, we're one step ahead of open AI. So the storylines are starting to proliferate. And as with Musk, you know, we always find this, they're just going to keep coming. We're just going to see the story shift to fit the mood.
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Chapter 3: What makes SpaceX different from traditional IPOs?
Nobody else can build this. I'm two steps ahead. And if you look to the horizon, that's where it's going to take me. And then over the horizon, There's this kind of magic pot of money. And his genius, and it is real genius, is that, yes, he builds this thing now. He has to keep moving the horizon because he's got no moats in his electric car business.
He's soon going to have a lot of competition in Rockets. And when that happens, where's his margin going to come from? Where's his profit going to come from? And so he's no longer, Tesla's no longer an electric car company. It's now a robot company. And it's a taxi operating company. It's going to be something else. And the same thing with SpaceX.
Yeah.
It's a good job it's not an electric car company just anymore because like sales of those things are falling off a cliff in Europe. But like, as you say, he's always over the next horizon. But like, how can it make sense to value this company at $1.75 trillion when it pulls in revenues that are probably no more than $20 billion with a B last year? I mean, come on, how is this going to happen?
Before we actually get to that valuation, I mean, you asked before about why he was sticking this together with XAI. We have to remember this is all being done for financial convenience. Elon is weaving this technology vision around it all, but it's fundamentally being driven by finance, real cold hard logic here. He needs to raise a ton of money. X AI is a money pit.
Put it this way, in his entire existence, he probably raised $25 billion, roughly $10 billion through SpaceX, $15 billion through Tesla. Well, he's
now looking at raising 75 billion in one go he's looked around he's seen this ai mania on wall street this willingness to fund hundreds of billions of dollars of infrastructure and he said this is my big chance and he's rammed everything together and he's going big i mean this is this is just incredible where all the dice so the valuation i've got no idea i'll leave that one to rob i'll leave that to you guys you're the market experts
Well, yeah, that might be a stretch. But like Rob, you know, you talk to a lot of investors. I talk to a lot of investors. Do you think they're going to swallow this at that kind of valuation? Because, you know, as Richard says, Musk is the master at like creating vibes. and creating kind of FOMO, right? Fear of missing out. Everyone wants to be in this thing.
But do you think the market mood is ready for an IPO with that sort of valuation of this sort of, you know, just behind the rainbow stuff in this moment in time?
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Chapter 4: How does SpaceX's business model impact its future?
up closer to the sun in a sun-synchronous orbit so that your solar panels are always exposed to the sun, you get a massive improvement benefit in terms of energy consumption. You're in the freezing cold of space where you can radiate heat out through massive radiator panels. So it all comes down to the cost. Can you actually afford to put these things up there in orbit?
And Musk is the leader in launch costs when he's working out on that. So you tell me, Rob. You tell me.
I do love the idea of an investment pitch that starts with, nothing here violates the laws of physics.
Yeah, exactly. Yeah. There's so much going on with this potential listing, right? But I just want to kind of imagine a situation sort of six months from now. This thing is a stock on the stock exchange that you can buy or sell at will. Do we think it's going to behave like a normal stock that responds to the P&L of the company and its earnings projections?
Or is it going to be like another Tesla, which is basically, that stock is basically a fan token for Elon Musk in a lot of ways. It doesn't really respond to the normal metrics. It is hard to justify the valuation of this company and of this stock based on what it actually earns. Is this just going to be another massive stock that just doesn't behave like all the others?
Like you've got a row of stocks. They're all the equivalent of like men in suits. And then you've got one that's dressed as like a clown.
Can I offer a California view to this just for a moment? Yes. Leave aside the actual valuation for a moment. For years, Wall Street's been criticized for not backing long-term bets. The US has underinvested. We've had massive underinvestment over the years. So what we're looking at here at the moment in this AI cycle Maybe it's massive overinvestment, but it's massive investment.
Elon is a long-term bet. If you want to play on the future, on the big new markets, and I mean, this point about it not being beyond the laws of physics, that is literally how Musk operates. He's looking at what he can build, and he's going out there to build it, and he's proven he can do a lot of this stuff. Well, we do. If you want a long-term bet, this is a long-term bet.
I think we do have examples of fanboy companies that have made good. The one I think of is Amazon. Both Richard and I were covering Amazon when people were saying, it doesn't make any money, it sells at a jillion times earnings. I was as guilty as any journalist of saying this. Is there a real company there? Can this possibly be worth what the market says it's worth?
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Chapter 5: What role does AI play in Elon Musk's vision for SpaceX?
Thank you, universe, for the magnolia tree.
Yeah, my neighbor, who doesn't look after his garden at all, like it's a total wreck, he won't mind me saying this, he has the most beautiful magnolia tree. And it annoys the hell out of me because I keep killing them. But his is gorgeous. I am long papal news. I was not expecting the Pope. to be so central to the news cycle in 2026, but I'm here for it. POTUS versus Pontifex, it's strong.
Yeah, I love this bit of the news cycle too.
It's so good. Richard, tell us something you love or something you hate.
Well, I'm very long Southern California these days. I moved out of San Francisco. San Francisco in the middle of a tech craze is not where you want to be. No, indeed. It is just a lunatic place. The good news is all the kind of doom loop stories, including ones we ran in the FT, those are all history. Now it's just money washing out of every doorway. And I'm watching that from a distance.
I'm down here in San Diego. Everything is laid back. The sun is out. Believe me, you don't want to be in San Francisco for a craze, but California is still a good place to be.
That's highly annoying, but it is nice in London at the moment. I will give you that. So, you know, come visit. Yeah. Rob, you have been Rob. Richard, thank you so much for being fantastic and coming on today. We know you have better things to do with your time, frankly. And thanks for sending us all of your wisdom from California.
Listeners, we are going to be back in your ears on Thursday, God willing. So listen up then. Unhedged is produced by Jake Harper and edited by Brian Erstadt. Our executive producer is Jacob Goldstein. We had additional help from Topher Forges. Cheryl Brumley is the FT's global head of audio. Special thanks to Laura Clark, Alistair Mackey, Greta Cohn and Natalie Sadler.
FT Premium subscribers can get the Unhedged newsletter for free and a 30-day free trial is available to everyone else. Just go to ft.com slash unhedged offer. I'm Katie Martin. Thanks for listening.
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