Wall Street is employing unconventional methods to value Elon Musk's SpaceX, considering benchmarks like Palantir and GE Vernova, rather than traditional aerospace rivals, to support a potential $1.75 trillion valuation. This approach aims to rationalize a premium price for a company with no direct public comparables.
SpaceX has confidentially filed for a U.S. IPO. While traditional metrics like earnings and revenue multiples would make the company appear expensive against aerospace firms like Boeing and telecom giants such as AT&T, financial backers argue these comparisons miss SpaceX's core strategy: capitalizing on long-term economic shifts with limited competition.
Investors are betting on Elon Musk's personal track record, similar to Tesla, and expect this dynamic to influence SpaceX's public offering. The company's CFO highlighted a massive total addressable market, estimating $370 billion for space business and $1.6 trillion for its Starlink internet service.
The debate over SpaceX's valuation centers on finding appropriate comparables. Some investors believe industry sector is less important than a firm's potential cash flows, growth, and risk. This perspective favors comparisons to companies involved in the AI data-center buildout, which have seen significant stock appreciation and high multiples.
For Starlink, traditional telecom benchmarks like AT&T and Verizon are seen as flawed due to aging infrastructure and market saturation. Instead, SpaceX investors point to Palantir for its secular growth, high returns, and asset-light model as a more fitting comparison, despite Palantir's own high market valuation.
Regarding rocket manufacturing, SpaceX's advancements, including reusable launch systems and dramatically reduced unit costs, are argued to warrant valuations far exceeding those of Lockheed Martin. Investors draw parallels to industrial companies like GE Vernova and Vertiv, whose stocks have surged due to AI data-center spending, suggesting SpaceX's launch operations should be re-rated similarly to the infrastructure providers of the AI era.
Valuation experts acknowledge that pricing SpaceX is complex due to its unique space operations and early-stage AI business. Some suggest that current pricing reflects investors' conviction in the company's momentum rather than strict adherence to traditional financial metrics, indicating a strong belief in SpaceX's future public market performance.