All spaced out on an IPO

THE euphoria surrounding stocks related to space exploration or exploitation of extraterrestrial resources in the wake of the SpaceX initial public offering (IPO) needs to be treated with a dose of caution.

While the excitement is understandable, given the size of the IPO, the commercial viability behind the ambitious goal to build colonies on Mars and deploy orbital data centres (DCs) to house massive artificial intelligence (AI) compute is unproven, with technological challenges that will be insurmountable for a good long while.

Then, there is the dual class share structure of the IPO that gives SpaceX founder Elon Musk an inordinate amount of control over the company and its direction. Unless investors have a lot of confidence in his leadership and vision, they are going to have to reconcile themselves to the man and his controversies, including his outspoken nature on politics and culture as well as the abrasive way he manages his businesses.

Given the long gestation period and uncertainty surrounding the SpaceX ventures, investors will have to contend with these risks.

SpaceX and other companies like Blue Origin and Sierra Space, for the most part privately owned by billionaires or a part of larger legacy defence-space contractors, are working towards expanding the human presence beyond near-earth orbit where there are only two space stations, the ageing International Space Station, scheduled to be decommissioned by the end of 2030, and China’s Tiangong, launched in 2022.

For now, the most viable space exploration options are unmanned space vehicles and near-earth orbit stations for small crews.

Going back to the euphoria, SpaceX has sparked a rally across space-related stocks since last week and going into this week at press time, with Bloomberg reporting that a Bank of America basket of US companies that are key players and potential beneficiaries of the space race having climbed 61% this year.

Procure Space ETF, with the appropriate Nasdaq ticker “UFO”, and the investment objective stated on its website to “provide diversification beyond the limitations of solely earthbound companies”, has gained 69% this year, according to Bloomberg.

The surge in the share price of these stocks appears to have no fundamentals, except to generate investor interest in the possibilities that come with an Elon Musk-backed IPO, which is targeting to raise a staggering US$75bil to value the company from US$1.75 trillion to US$2 trillion upon listing. It would be interesting to know whether

the US government’s release of declassified files over recent weeks connected to UFO sightings or unexplained phenomena helped stoked investor interest because it is suspiciously coincidental.

Of the company’s three segments, only the Starlink business is making money, with the loss-making rocket launch and AI businesses still ploughing massive amounts of cash into research and development.

Hopefully, the deal inked with Anthropic in which SpaceX gets paid US$1.25bil a month through May 2029 leasing its DCs to the AI startup will help cushion the losses and help fund the ambitions for space exploration and build the orbital DCs.

Breaking down the numbers, SpaceX reported a net loss of US$5bil for the financial year ended Dec 31, 2025 (FY25) compared to a US$791mil net profit in FY24. Revenue jumped 33% to US$18.7bil.

For the first quarter ended March 31, 2026 (1Q26), the company posted a net loss that widened to US$4.3bil from US$528mil in 1Q25 on revenue that increased 15.4% to US$4.7bil.

The IPO values the company at 100 times trailing 12 months revenue based on FY25 financial results, according to news reports.

There is something to space travel and exploration that appeals to people, and SpaceX, with its goals, captures this yearning. Together with a handful of other mostly US-based companies, it has been active in space tourism, ferrying high-net-worth individuals on flights where they can experience zero-gravity and life onboard a spacecraft without showers.

In fact, SpaceX ferries tourists and crew to the International Space Station on orbital flights.

Now, the goal will be to go far beyond, way past the moon and that comes with more challenges.

This is where the complications come in and the limitations of present-day technology in enabling safe and comfortable space travel beyond the moon comes into question.

Those familiar with the videos uploaded by Nasa of the Artemis II space mission flying a crew of four in a spacecraft with 330 cubic ft of living space over a nine-day mission to the farside of the moon will know how cramped the living conditions are. Then, there is the ever-present danger of space travel.

Consider the distance. The roundtrip by the Artemis II mission was 1.1 million km and brought humans to the furthest distance of space ever travelled, at close to 407,000km beyond Earth.

The journey to Mars will not be a nine-day trip and will likely take place when both planets are closest to each other, which occurs approximately every 26 months. One leg of a trip will then take seven to nine months.

SpaceX proposes to do that in six. Many things can go wrong, and the crew of the spacecraft will be exposed to radiation while on the journey there and back.

On its website, SpaceX shared that it intends to send cargo flights and exploratory missions to Mars no earlier than 2028.

That is ambitious, considering Nasa is planning to send humans to the moon only in 2028. The maths for SpaceX also does not add up, as sending spacecraft, even unmanned ones, will cost tens of billions of US dollars and it is a loss-making company.

There are so many unknowns, and the journey towards a multi-planetary future is still way off in the future.