SpaceX's revenue last year was $18.7 billion, a year-on-year increase of 33%, but with a net loss of $4.9 billion.

By: Bao Yilong

Source: Wall Street Journal

SpaceX has officially submitted its IPO prospectus to the U.S. Securities and Exchange Commission, which is expected to be the largest IPO in history and could potentially make founder Elon Musk the first individual to surpass a net worth of $1 trillion.

The prospectus dated May 20 shows that SpaceX's total revenue for 2025 is projected to reach $18.7 billion, a 33% year-on-year increase, but the net loss is $4.9 billion. In the first quarter of 2026, revenue is approximately $4.7 billion, with a net loss of $4.3 billion.

The prospectus did not disclose the planned amount to be raised, and details regarding the pricing range will be published in subsequent supplemental documents.

The funds raised from the IPO will mainly be used to repay $20 billion in transitional bridge loans, as well as to expand AI computing infrastructure, upgrade launch platforms, and expand the scale of satellite constellations.

The Wall Street Journal mentioned that the core highlights of this IPO revolve around SpaceX's space launches, Starlink satellite broadband, and the integration of AI business after the acquisition of xAI.

The prospectus indicates that the connectivity business has achieved scaled profitability, while the AI sector is still in a phase of significant losses, with capital expenditures far exceeding the combined total of the other two sectors.

At the same time, Musk will hold approximately 85.1% of the voting rights post-IPO. According to Bloomberg data, Musk currently has a net worth of about $667 billion. If SpaceX ultimately goes public with a valuation of $2 trillion, combined with his Tesla holdings, his personal wealth is expected to exceed the $1 trillion mark for the first time.

Starlink supports the revenue base, AI investment drags down profitability

SpaceX divides its business into three main sectors: space, connectivity, and AI, with significantly varied financial performance.

The connectivity sector, centered around Starlink satellite internet services, is currently the only profitable business within the company.

In the first quarter of this year, Starlink generated revenue of $3.26 billion, accounting for 69% of the company’s total revenue, with an operating profit of $1.19 billion.

As of the prospectus disclosure, Starlink has reached 10.3 million global users, doubling from 5 million a year ago. However, the company also pointed out that with an increasing user proportion outside North America and the promotion of low-price packages, average revenue per user is declining.

The space sector reported an operating loss of $619 million in the first quarter. The prospectus shows that SpaceX has invested over $15 billion in the Starship heavy rocket, with an investment of about $3 billion just in 2025. The 12th test flight of Starship is expected to take place this week.

The AI sector experienced an operating loss of $2.5 billion in the first quarter, becoming the largest factor dragging down the overall profitability of the company. In the first quarter of this year, capital expenditure related to AI reached $7.7 billion, accounting for over 75% of the company's total capital expenditures of $10.1 billion. The total AI capital expenditures for 2025 are projected to be about $12.7 billion, nearly doubling year-on-year.

Ground data centers remain the main battlefield, space computing power still a blueprint

In February of this year, when Musk integrated xAI into SpaceX, he referred to solar-powered orbital data centers as one of the core logics, claiming that the cost of running computing power in space would be lower than that on the ground within three years.

However, the prospectus reveals that xAI is currently still in a large-scale expansion of ground facilities powered by natural gas turbines, including a transaction of about $2 billion.

The prospectus clearly states that SpaceX's capacity to expand data center infrastructure depends on turbine supply, natural gas procurement, and regulatory approvals.

Nevertheless, SpaceX still positions orbital AI computing satellites as the next significant growth engine in the prospectus, with plans to begin deployment as early as 2028.

The company wrote in the prospectus: "Orbital AI computing is an extremely challenging technical problem, and we believe we are the only company with a commercially viable path capable of building orbital AI computing capacity at scale."

The key to achieving this goal depends on the Starship rocket completing its predetermined performance targets to enable economically viable orbital deployment.

SpaceX has applied to the U.S. Federal Communications Commission for permission to launch up to 1 million satellites, which will be equipped with GPUs and powered by solar energy, forming a network of space data centers to serve AI projects.

The company expects the potential market size to reach up to $285 trillion, with the AI opportunity about $26.5 trillion, covering various directions such as space data centers, consumer subscriptions, digital advertising, and enterprise applications.

xAI integration reshapes the AI landscape, Grok mired in regulatory risks

SpaceX completed the merger with Musk's AI startup xAI in February this year, with a post-merger valuation of $1.25 trillion.

The prospectus points out in the risk factors section that Grok is facing multiple regulatory agencies and law enforcement departments regarding investigations and inquiries into pornographic deepfake content, which may lead to legal liabilities, negative public opinion, or other sanctions.

Reports indicate that eight law enforcement and regulatory agencies have confirmed that investigations are ongoing. Musk himself also acknowledged that xAI's technology "was not built correctly from the beginning" and needs to be "rebuilt from the ground up."

In terms of AI commercialization layout, SpaceX recently signed a $40 billion computing power cooperation agreement with Anthropic, which will rent all computing power of SpaceX's Colossus 1 data center in Memphis, Tennessee, at a price of $1.25 billion per month, with the agreement lasting until May 2029.

However, the agreement comes with an unusual clause. Both parties can unilaterally cancel the contract with 90 days' prior notice, which is extremely rare for a contract of such magnitude in computing power agreements, making it difficult for investors to treat it as a stable income source in their valuation models.

Additionally, SpaceX plans to acquire the code editing tool startup Cursor for $60 billion in stock, with the transaction expected to proceed following the IPO completion. If the acquisition does not materialize, Cursor can receive a $1.5 billion termination fee and an $8.5 billion deferred service fee.

Large-scale related party transactions, Musk's empire supports each other

The prospectus has disclosed for the first time the scale of related party transactions between SpaceX and other companies under Musk.

In 2025, SpaceX purchased $131 million worth of Cybertrucks from Tesla at suggested retail prices, and concurrently bought $506 million worth of Tesla Megapack storage products.

From early 2024 until February 2026, xAI has cumulatively paid Tesla approximately $731 million.

The collaboration between companies goes beyond procurement. SpaceX and Tesla are jointly advancing a large-scale chip factory project named "Terafab," as well as an AI collaboration project named "Macrohard."

Tesla is mentioned 87 times in the prospectus, which also states, "Plans to explore more strategic cooperation areas with Tesla in the future."

Musk firmly controls voting rights, compensation linked to Mars colonization

The prospectus has fully disclosed SpaceX's equity and governance structure for the first time.

Musk holds 849.5 million Class A shares and 5.57 billion Class B shares (with 10 votes per share), collectively controlling 85% of the company's voting rights and ensuring absolute control over the company post-IPO.

Aside from Musk, no individual or institution holds more than 5% of the shares, with the private equity firm Valor Entities holding 7.3% of common stock, making it the second-largest shareholder.

Musk's latest compensation plan at SpaceX consists of two astronomical options linked to outcomes, without a set deadline, directly tied to Mars and AI infrastructure:

• The unlocking condition for the Mars colonization plan is that SpaceX's market value reaches $7.5 trillion.
• The unlocking condition for the orbital data center plan is that the company's market value reaches $6.6 trillion.

Besides the basic annual salary of $54,000, Musk will receive nothing if the above technical and market value milestones are not achieved.

The company's board members have also been publicly disclosed for the first time; besides Musk serving as chairman, president and COO Gwynne Shotwell, CFO Bret Johnsen, and several venture capitalists and private equity executives are also on the board, including Google executive Donald Harrison.

Severe financial losses, valuation logic challenges investors

SpaceX's financial situation appears particularly unique among the super-large-cap tech companies planning to go public.

In 2025, the company is expected to generate about $18.7 billion in revenue, but its net loss is as high as $4.9 billion. In comparison, Meta, which has a similar valuation, generated more than 11 times SpaceX's revenue last year, with a net profit of $60 billion.

If the IPO valuation ultimately lands above $1.5 trillion, SpaceX's price-to-sales ratio will reach about 80 times, while the overall price-to-sales ratio of the top 15 U.S. companies by market capitalization is only about 7 times.

This pricing logic is quite similar to that of Tesla, another company under Musk, which, due to massive investments in AI, humanoid robots, and Robotaxi, has projected very minimal profits in 2025 but continues to trade at nearly 400 times its rolling price-to-earnings ratio.

Analysts believe that investors betting on SpaceX or Tesla are essentially believing that Musk can translate the current massive investments into significant value in the distant future.