Summary of Key Points
SpaceX had initially planned to go public in June with a valuation of $2 trillion, aiming to raise $800 billion. However, within just a few days, they quietly lowered the valuation target to $1.8 trillion and reduced the fundraising amount to around $750 billion. Although Elon Musk denied the valuation reduction, the company is indeed facing both internal and external pressures: significant internal losses (a loss of $4.9 billion in 2025 and another $4.3 billion in the first quarter of 2026), as well as re-evaluated risks in the commercial aerospace sector (the explosion of Blue Origin's rocket and delays in the Starship project). Nevertheless, even with the lowered valuation, Musk will become the world's first trillionaire thanks to his 42% stake in SpaceX. The technologies he controls—rockets, satellites, AI, etc.—go beyond mere wealth.
Why the Sudden Valuation Drop?
The reduction in valuation is not unfounded; it was driven by both internal and external factors:
Internal: Profit Losses Deter Investors
SpaceX submitted its prospectus in May, revealing its financial data for the first time: revenue increased by 33% in 2025 to $18.6 billion, but net losses amounted to $4.9 billion, mainly due to high costs associated with xAI (annual operating losses of $6.4 billion). The first quarter of 2026 was even worse, with a loss of $4.3 billion, nearly matching the annual loss from the previous year. Investors realized that the previously claimed valuation of $2 trillion was overly ambitious and needed to be adjusted to attract new capital—after all, no one wants to invest in a company that is still losing money.
External: Suddenly Revealed Industry Risks
Blue Origin's "New Glenn" rocket exploded during a ground test at the end of May, destroying the launch pad and ruining all its launch plans for the year. This incident has raised concerns about the entire commercial aerospace industry: it seems that rockets can fail due to immature technology. Coupled with SpaceX's slow progress on the Starship project (which is scheduled to deliver cargo to the moon and assist NASA in lunar missions by 2028), time is running out, and if these goals are not met, the valuation will naturally be lowered.
Business Analysis: What’s Real, What’s Just Hype?
Musk has presented a compelling vision for SpaceX that combines rockets, satellites, AI, and chips, but let’s break down the reality:
1. Rocket Business: Stable but with Limited Growth
The Falcon 9 is the most frequently launched commercial rocket in the world, using mature reusable technology that costs only one-tenth of the industry average. NASA and the U.S. military are major customers, and SpaceX even made a profit in 2025—this is a stabilizing factor for the company. However, the rocket market is relatively small, and there is a clear ceiling to its growth potential, making it difficult to support a valuation of $1 trillion on its own.
2. Starlink Satellite Service: A Cash Cow with Competition
In 2025, Starlink generated revenue of $11.4 billion and profits of $4.4 billion (with a profit margin of 39%), serving 9 million users in 155 countries and gaining an additional 4.6 million users. This business has crossed the threshold where more users lead to lower costs, providing stable cash flow. However, competitors such as Amazon, Europe, and China are also entering the low-orbit satellite internet market, making it increasingly challenging to attract new users.
3. AI Computing Power: An Attractive Concept but Uncertain
After merging with xAI, SpaceX proposed the idea of using space-based computing nodes powered by unlimited solar energy to provide low-latency AI services to Earth, targeting a market worth $28.5 trillion (of which AI accounts for $26.5 trillion). Although there are contracts with Anthropic for computing services, this is still in the early stages of implementation. Musk is good at telling grand stories, but investors need to see concrete evidence of profitability.
Elon Musk: The World’s First Trillionaire
Even with the valuation reduced to $1.8 trillion, Musk remains the biggest winner:
He owns approximately 42% of SpaceX, which, at a valuation of $1.75 trillion, is worth $735 billion. Adding in his other assets (such as X and Tesla), his net wealth will exceed one trillion after the company goes public—making him the first trillionaire in human history, surpassing the peak fortunes of Rockefeller and Gates even after adjusting for inflation.
More importantly, he controls key technologies that define the future: rocket launches, global satellite internet, social media (X), brain-computer interfaces (Neuralink), and AI computing power. His influence extends beyond mere wealth; he has the power to shape the direction of future technology.
The Cooling Down of the Space Economy
There was once a lot of enthusiasm for commercial aerospace, with many seeing it as the next "blue ocean," but now things are becoming more pragmatic:
The Blue Origin explosion has highlighted the higher risks in this industry, and SpaceX’s losses have shown that even leaders cannot guarantee substantial profits. Investors are no longer blindly pursuing grand narratives; they focus on actual financial performance, such as revenue growth, profit margins, and progress in business initiatives. After all, a good story needs solid financial backing.
In summary, the reduction in SpaceX’s valuation reflects market rationality. However, Musk’s wealth and his control over future technologies are the real highlights of this IPO. In this capital-driven landscape, Musk remains the ultimate winner.