Source: Jin Shi Data

In recent years, as SpaceX has gradually transformed into a giant in the aerospace sector, market interest in the company has grown exponentially. However, investors should expect significant fluctuations in stock prices after its public listing.

According to Bloomberg, SpaceX may secretly submit its IPO application as soon as this month, seeking a valuation of over $1.75 trillion. The company plans to go public in June, potentially overlapping with Musk's birthday or a rare planetary alignment event. Based in Starbase, Texas, SpaceX's valuation is estimated at around $1.25 trillion following its acquisition of Musk's artificial intelligence company, xAI.

PitchBook analyst Franco Granda wrote in a report on Tuesday that post-IPO SpaceX stock performance will resemble that of Tesla (TSLA.O), "but with higher volatility."

Future Growth Expectations: Starlink Will Contribute Major Revenue

PitchBook predicts that by 2040, SpaceX's revenue will reach $150 billion, with adjusted profits at $95 billion.

In contrast, the company’s highest revenue last year was about $16 billion, with profits around $8 billion. Future annual revenues of about $42 billion are expected to come from the Starlink satellite internet business, which currently contributes most of SpaceX's cash flow.

This forecast does not include the xAI business. xAI is currently burning cash quickly, but it may secure more projects from the U.S. Department of Defense in the future. The prediction also assumes that Tesla and SpaceX will not merge, although Musk and some analysts have previously suggested this possibility.

Musk noted on the X platform last November, "My company, surprisingly in some ways, is heading toward integration."

The Musk Effect: Vision-Driven but Timelines Often Delayed

Granda stated that many lessons learned by investors from Tesla may also apply to SpaceX. For instance, both companies are influenced by Musk's well-known public optimism.

Granda illustrated that Tesla had promised to achieve a production rate of 5,000 cars per week by the end of 2017 but fell into "production hell," failing to meet the target. However, when the company finally reached this milestone in mid-2018, the stock price surged.

SpaceX has also experienced similar delays. Its Starship super rocket development has faced multiple setbacks, and other spacecraft projects in the company's history have encountered similar situations. Musk set 2022 as the "ideal target" for sending unmanned missions to Mars, but by 2026, this mission will still require several more years to achieve.

Nevertheless, investors have gradually become accustomed to Musk's timelines being somewhat "flexible."

Thus, when the December deadline for the autonomous taxi project passed, investors did not panic excessively. Subsequently, when Musk later achieved the set goals, the stock price rose accordingly. Granda referred to this phenomenon as the "credibility ledger," where investors automatically factor in delays but focus more on the overall vision.

This could be advantageous for SpaceX. The company recently postponed its Mars colonization plan while applying to regulators to launch up to one million space data centers into orbit, relying on the progress of the Starship project. SpaceX has also stated plans to build a city on the Moon.

Post-IPO Challenges: Higher Volatility and Heavy Dependence on Musk

However, as a public company, SpaceX must achieve these goals while continuously making progress in xAI and Starlink businesses in front of Wall Street investors. Therefore, market reactions could be extremely intense.

Granda predicts that if some significant news usually causes Tesla stock to fluctuate by 10% to 15%, it could trigger a 20% to 30% fluctuation in SpaceX stock. This is partly because SpaceX is expected to have a publicly tradable share ratio of only about 3.3%.

SpaceX stock may also benefit from what's known as the "Musk premium." Even when Tesla's core electric vehicle business experiences downturns, this premium helps keep its stock price elevated. However, this aura also means that Musk's companies are highly dependent on him.

Cantor Fitzgerald analyst Andres Sheppard previously stated:

"Today, over 50% of shareholders believe that Tesla is Elon, and Elon is Tesla. Many people, possibly even a majority, directly link Tesla's success to Elon’s tenure."

Tesla's annual report also mentioned the company's reliance on Musk, warning that if Musk were forced to sell part of his stake, the stock price might decline. SpaceX, founded by Musk over twenty years ago, currently sees him holding about 44% of the company's shares, suggesting a similarly high dependency on the CEO.

Granda indicated that negative news from Tesla is likely to put pressure on SpaceX stock prices, and vice versa. Meanwhile, Musk's political stances have also sparked controversy and affected Tesla sales. Granda concluded:

"A lower free float percentage, early-stage technology, and a highly concentrated Musk risk exposure combine to suggest that its volatility could exceed the historically quite severe volatility patterns of Tesla."