SpaceX IPO in the works?

Elon Musk is already wealthy. Forbes, in its annual ‘rich list’, puts the co-founder of PayPal and the brains behind the Tesla electric car, the Solar City scheme, and ‘rocket-to-Mars’ SpaceX project as having a net worth of some $14.8 billion. This doesn’t wholly include SpaceX, which is currently privately held.

However, the rumour mill is working overtime and now suggesting that an Initial Public Offering (IPO) for SpaceX is imminent. The concept – and valuation – is helped hugely by the success on March 30th when a ‘pre-flown’ Falcon 9 rocket placed a SES satellite into its transfer orbit, and proving not only that rockets could be re-used but re-flown again and again. Musk’s concept is to re-use 100 per cent of a rocket over and over again, and thus slash millions from the cost of getting satellites – and humans – into space.

Pundits and market-watchers are now suggesting that a SpaceX IPO could be worth many billions, and we have some guidance for these estimates.

Perhaps amazingly, SpaceX is already the ninth most valuable private company on the planet, and currently valued at around $12 billion despite only having enjoyed a very limited amount of either public or private investment exposure. Initially SpaceX had operated on total funding of less than $1 billion, with private equity investors having stumped up around $248 million, Musk himself putting around $100 million into the business and a couple of specific investors placing another $100 million or so, according to PitchBook. But in January 2015 SpaceX said it had raised a new batch of cash, from Google and Fidelity Investments, and totalling another $1 billion with Google and Fidelity gaining (jointly) about a 10 per cent share of the business – hence the $12 billion or so overall valuation.

On February 6th this year, SpaceX announced that its launch pattern would see a rocket go up “roughly every two or three weeks”. The next launch is a government mission for the USA’s National Reconnaissance Office on April 30th.  On around May 15th it will launch Inmarsat-5 F4, a ‘heavy’ satellite which will not see the Falcon 9’s first stage recovered. At the end of May, there’s another NASA mission scheduled, and this should be followed by a satellite for Bulgaria (mid-June).

In other words, if all proceeds as planned, Space X will then evolve into a very routine system and start to earn some serious cash from the 70 NASA supply missions to the International Space Station and collectively worth $10 billion, as well as dozens of satellites owned by the world’s giant satellite operators, and each priced at around $55-$65 million per launch.

The speculation – and it is just speculation at the moment – is that a SpaceX valuation could easily top that of Musk’s Tesla car business. Today, Tesla shares are trading at $300 each, and giving the company a market capitalisation of a staggering $48 billion (Ford Motors is worth $44 billion).

Musk owns 54 per cent of the equity in the business, although has 78 per cent of the voting stock. A SpaceX IPO will make him very rich indeed, which perhaps he doesn’t need, except to say that his ultimate dream is to transport humans to Mars – and that might prove expensive.

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