In the past 18 years, after a series of spectacular and occasionally failed rocket launches, Elon Musk’s SpaceX has emerged as Silicon Valley’s next colossus, a once in a generation business in the same league as an Amazon, a Google or a Microsoft. SpaceX’s current funding round values the company at a pre-money valuation of $42bn. Yet the cognoscenti of Wall Street and Silicon Valley that I have spoken to project a potential IPO two years from now at a market cap of $120 to $150bn. Elon Musk has said that SpaceX could be more valuable than Tesla, which is valued just below $300bn on NASDAQ as I write.
The real ballast in SpaceX’s business model lies in its plan to use a constellation of 12,000 low orbit satellites to provide broadband internet access to the world’s entire population, thus disrupting the $1trn telecommunication industry’s cable and fibre optics infrastructure. This is the company’s Starlink project, which I believe will be remembered by history in the same ‘tech Valhalla’ as MS-DOS, Amazon Web Services and YouTube. Elon Musk has predicted that Starlink will ensure that SpaceX will generate an annual EBITDA of $30bn to $50bn per annum. Some of the most respected technology analysts and venture capital partners in Silicon Valley I know believe that Musk’s prediction is perfectly credible. If so, an investment in SpaceX now in the private market could be worth 10 times its current value in the next five to seven years.
SpaceX has accomplished a series of milestones in the past decade. It has dramatically reduced the cost of commercial rocket launches with its Falcon/Dragon programme and now dominates 65% of the global commercial rocket launch market. SpaceX has also dramatically reduced the cost of launching with low orbit satellites and Starlink now has 500 satellites, one fourth of all satellites in orbit.