{"id":529937,"date":"2026-06-11T14:02:16","date_gmt":"2026-06-11T14:02:16","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/529937\/"},"modified":"2026-06-11T14:02:16","modified_gmt":"2026-06-11T14:02:16","slug":"investors-in-elon-musks-spacex-will-need-to-strap-in-for-a-bumpy-ride-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/529937\/","title":{"rendered":"Investors in Elon Musk\u2019s SpaceX will need to strap in for a bumpy ride \u2013 The Irish Times"},"content":{"rendered":"

Are we watching the final chapter of a tech feeding frenzy that has driven the US stock market relentlessly higher? Or the start of a new phase in the AI-driven rise that has already sent US markets to new highs? <\/p>\n

On Friday, there will be a new marker as Elon Musk\u2019s<\/a> SpaceX<\/a> floats on the stock market, the biggest IPO in history which has a target valuation on the company of an eye-watering $1.75 trillion. That is $1.75 thousand billion. <\/p>\n

The company plans to raise<\/a> around $75 billion in the float \u2013 selling roughly 4 per cent of its stock. Mega floats from Anthropic and OpenAI are due to follow, along with big fundraising from Alphabet and Meta as all the AI players \u2013 including the most profitable ones \u2013 seek to raise more cash for seemingly endless investment. <\/p>\n

It will be a big test of the US<\/a> market and its confidence in the future of AI<\/a>. And while Irish investors can choose whether or not to buy these shares directly, the investments of pension funds and many other vehicles such as exchange-traded funds are going to have a rising chunk of AI in their portfolios, even if no one is quite sure who will actually make money in this new era. <\/p>\n

Big flotations to allow companies \u2013 and their owners \u2013 to raise cash from investors, including the retail sector, can be a sign of a market at or near its peak. So is floating companies like SpaceX which are not making a profit and may not do so for some years.<\/p>\n

Hype and hope collide in the marketing of the SpaceX float. With revenues of $18.7 billion in 2025 and net losses of almost $5 billion, there is a lot of \u201chope value\u201d behind the flotation price being sought by Musk, which is more than 90 times annual revenues. A much-quoted analysis by US financial services firm Morningstar <\/a>argues that a reasonable valuation would be less than half the figure sought. Key to the float is an attempt to attract retail investors, who are thus exposed to the risk of a flotation at a valuation that is off the charts and require the company \u2013 and its AI arm in particular \u2013 to grow exponentially. <\/p>\n

\"\"\u2018No profit and crap governance\u2019 \u2013 is Elon Musk\u2019s SpaceX actually worth $1.75 trillion?<\/p>\n

SpaceX, of course, as befits a Musk operation, is unique. Its core business has been Starlink, a global internet provider for consumers, business and many airlines. This is where most of its revenue comes from and is the only profitable division. Then there is the original space-launch service, for satellites, supplies and astronauts to the International Space Station and so on. In time, this will also \u2013 if Musk is to be believed \u2013 feature trips to Mars. <\/p>\n

Finally, there are Musk\u2019s AI interests, merged into SpaceX, including the Grok platform, X \u2013 formerly Twitter \u2013 and data-centre infrastructure, which requires major investment. SpaceX generates cash, but it\u2019s all being diverted into investment, mainly relating to the next generation of rocket and of course AI, including massive spending on data centres and research.<\/p>\n

Musk has a big business. It has managed to almost corner the market in delivering \u201cpayloads\u201d such as satellites into orbit, based on reusable infrastructure. It has invested significantly in a new \u201cStarship\u201d rocket which, if successful, would take this to another level and widen its advantage over competitors. Its Starlink business is growing and its ability to deliver internet access to more remote areas is a notable advantage. It is investing tens of billions in its AI play and it remains to be seen how this pans out. <\/p>\n

It is here that Morningstar and other analysts are most sceptical of the forecasts made in the prospectus for the IPO, particularly given the lead other companies such as Anthropic have in developing and commercialising AI models and the uncertain return from the massive investment being made. Goldman Sachs calculates that the company\u2019s AI revenues would need to grow a hundredfold \u2013 from $3.2 billion annually to $322 billion \u2013 by 2030 to meet its targets. <\/p>\n

\"SpaceXSpaceX CEO Elon Musk. Photograph: Haiyun Jiang\/The New York Times<\/p>\n

According to Morningstar, adding all the bits together and taking a realistic view of its prospects still leaves the SpaceX valuation well short of what Musk is looking for. As an investor you can, of course, choose to bet on the world\u2019s richest man \u2013 because that is what those putting money into the IPO are effectively doing. Morningstar reckons a reasonable value would be around $780 billion, less than half what is being sought. It advises private investors who want to take a punt on Musk to sit on the sidelines for now, reckoning they will be able to buy in at a lower level in time.<\/p>\n

This does not mean the IPO will fall flat. It will most probably get away successfully. It has the backing of most of the big US investment banks. Also, as Aidan Donnelly, head of global equities at Davy, explained on The Irish Times Inside Business podcast<\/a> this week, it is the first giant IPO in a number of years, which has left a pent-up demand from investors in an era when share buy-backs from major companies have been more common.<\/p>\n

Goldman Sachs has estimated that the net supply of US stocks will be flat this year, having declined each year since 2003, and is set to rise next year as the SpaceX float is due to be followed by Anthropic and OpenAI, as well as fund-raisings by other players investing in AI. How this plays into market valuations will be interesting to watch as stock shortage has been a theme in recent years, alongside, of course, the massive surge in big-tech valuations based on AI and the more recent rise in the price of stocks benefiting from the resulting investment, such as chip manufacturers. <\/p>\n

With the investment banks on board and encouraging their retail clients, and a certain amount of institutional buying all but guaranteed by the inclusion of the stock \u2013 after 15 days \u2013 in the Nasdaq index, it could get initial support provided the market generally does not hit a wobble. This role of passive funds, which control large parts of the US market, will be vital, though Donnelly points out that SpaceX will not be admitted to the S&P500 index for at least a year, as it resisted pressure to change its rules to allow it to enter. <\/p>\n

This will limit buying from funds that are obliged to match key stock indices \u2013 or generally do so. So will the small \u201cfree float\u201d of shares \u2013 the amount which is trading on the market \u2013 which will be around 4 per cent of the total. So, while big funds will be pulled in, the float depends to a large extent on the \u201cpunter\u201d. They may feel they are buying into something which has enormous longer-term prospects \u2013 but they are being asked to subscribe at prices well above existing investors in a hugely risky enterprise in a frothy stock market. <\/p>\n

Musk retains voting control through his holding of a special class of shares \u2013 so-called B shares \u2013 and is also protected from investor legal actions. Thus, says Donnelly, big investors have no way to challenge the way the company is being run or to take legal action against it, as would normally be the case. It further underlines that those investing in SpaceX are throwing in their lot with Musk.<\/p>\n

The real test of SpaceX may come in the months ahead. Lock-in periods for those who have already invested in the company are phased out on a tiered basis \u2013 starting after it has reported its first quarterly results as a public company and mostly ending after six moths. More stock is likely to come on the market as some of these investors look to cash in. Musk and some early investors who stand to see massive valuations on their holdings have a one-year lock-in.<\/p>\n

So, as well as the initial test in getting the stock \u201caway\u201d at an acceptable price \u2013 which could be higher or lower than the putative $1.75 trillion valuation \u2013 SpaceX will face further key periods in the months ahead. And of course the wider context for investors is a US market which is already high on the hope value of AI with historically high valuations and uncertainty about which companies will make profits from the technology to justify this massive level of investment. <\/p>\n

Irish investors \u2013 apart, perhaps, from a few high rollers \u2013 would not have access to the IPO but can buy in the secondary market. Many will also see SpaceX holdings in investment of pension funds they hold over time. As the seventh biggest company in the world if it attains its float price, the company will feature in many portfolios. Its value will depend on two things: the underlying strength of the US market \u2013 already trading at high valuations \u2013 and the performance of SpaceX. On both fronts, investors will be taking a very big risk. It looks certain \u2013 particularly with the small amount of shares trading on the market \u2013 to be a bumpy ride. <\/p>\n","protected":false},"excerpt":{"rendered":"Are we watching the final chapter of a tech feeding frenzy that has driven the US stock market…\n","protected":false},"author":2,"featured_media":529938,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[270],"tags":[289,18,1647,19,17,133,13083,451,5908,2731],"class_list":["post-529937","post","type-post","status-publish","format-standard","has-post-thumbnail","category-space","tag-artificial-intelligence","tag-eire","tag-elon-musk","tag-ie","tag-ireland","tag-science","tag-smart-money","tag-space","tag-space-x","tag-spacex"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ie\/116731848803025541","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/529937","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=529937"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/529937\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/529938"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=529937"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=529937"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=529937"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}