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Zhou Hang: What is SpaceX really worth?

Author: Zhou Hang

SpaceX’s valuation around its IPO may be overvalued by $1.25 trillion。

This is not meant to diminish SpaceX’s greatness. On the contrary, anyone seriously discussing SpaceX must first acknowledge this: it may be one of the greatest industrial companies of the past 50 years.

But a company’s greatness and whether its stock is worth buying at any price are two entirely different matters.

SpaceX can simultaneously be 'the greatest industrial enterprise of the 21st century' and 'a severely overvalued investment target.' These two statements are not mutually exclusive.

Any honest discussion about SpaceX's valuation must begin with one sentence:It is the most successful industrial company of the past 25 years—without exception—not even Tesla rivals it.This is not flattery; it is an engineering-economic fact.

Tesla disrupted a mature 150-year-old industry—the automobile sector. Its competitors were Mercedes-Benz, Ford, and Toyota. These rivals are certainly formidable, but they are commercial enterprises without state backing or political barriers; the essence of their competition lies in products, brands, and supply chains.

SpaceX disrupted a 60-year-old state-monopolized industry—spaceflight. Its competitors were NASA, Roscosmos, ESA, and CNSA.This isAn entirely different level of difficulty: engineeringbarriers are higher, capital intensity is greater, regulation is more complex, and national interests are far more deeply entrenched. When Musk founded SpaceX in 2002, the entire aerospace industry was essentially an extension of government missions; commercial companies were not considered capable of building rockets, let alone ones cheaper than those built by nations.

More than two decades later, SpaceX has slashed launch costs from $54,500 per kilogram during the Space Shuttle era to $1,500 per kilogram—a 36-fold reduction. It now conducts 165 launches per year,a single company exceeding the combined launch totals of all other countries and all commercial players worldwide.. It built humanity's first truly reusable rocket, with a single Falcon 9 first stage flying 32 times and achieving a success rate exceeding 99%. It deployed the world's first global satellite internet—capable of covering over one billion users—and became a decisive strategic asset on the very first day of the Ukraine war.

Tesla will still face fierce competition from Chinese electric vehicles in 2025; SpaceX's share of the global commercial launch market,is already approaching a monopoly。

SpaceX is a great company—possibly the greatest industrial company on Earth in the past 50 years. Any criticism regarding its valuation must first acknowledge this fact.

Let’s put it into perspective with a set of comparisons:

* Combined market capitalization of Boeing, Lockheed Martin, Northrop Grumman, RTX, and General Dynamics. SpaceX alone is valued at 2.5 times the total of these five companies.

In other words,SpaceX’s valuation alone would exceed Mexico’s entire annual GDP, surpass either Tesla or Berkshire Hathaway individually, and exceed the combined market capitalization of all its traditional aerospace rivals 2.5x。

This in itself isn't a problem—great companies deserve great valuations. But a 2.5x multiple suggests the market isn't pricing it as a 'space company' or even as an 'industrial company.' Instead, the market is pricing it based on a hybrid framework that resemblessomething closer to 'sovereign-grade asset + AI-era infrastructure + narrative premium'as its valuation paradigm.

Is this valuation reasonable?

Let’s list out all of SpaceX’s current businesses and seriously estimate how much revenue it could generate by 2030, assuming reasonably optimistic scenarios for each segment:

If SpaceX achieves $50–80 billion in revenue by 2030,its corresponding EBITDA(Earnings Before Interest, Taxes, Depreciation, and Amortization—a rough proxy for core operating cash profitability)would be approximately $20–35 billion (assuming a 40% margin, which is already a highly optimistic assumption).

Using the standard SaaS valuation multiple of 25–35x EV/EBITDA—which is already generous for tech companies,Top-tierSpaceX’s 'reasonable valuation' range in 2030 is$500 billion to $1.2 trillion。

Taking the conservative anchor of this range,a conservative anchor of $500 billion（(i.e., valuing all 2030 business lines on a reasonable, not speculative, basis), the market is pricing it at $1.75 trillion.

The gap:$1.25 trillion。

This gapcannot be explained by any standard financial model.. It is notDiscounted Cash Flowthe result of a Discounted Cash Flow (DCF) analysis, nor derived from a Price-to-Sales (P/S) multiple, nor based on comparable company valuations—none of these methodologies can justify a $1.75 trillion valuation.

This gap did not appear out of thin air. It stems from three real sources:

First source: Long-term vision premium. If Starship achieves stable operations between 2027 and 2030, launch costs could fall to $200 per kilogram or even lower. This would unlock a 30-fold increase in capacity—sufficient to enable entirely new businesses (in-orbit data centers, lunar commerce, deep-space robotics).Anthropic Entities have already publicly expressed their willingness to pay for gigawatt-scale computing power in space. If this narrative materializes, SpaceX’s total addressable market—including new ventures—could reach $200–500 billion annually by 2040. This upside is indeed enormous—hence, it is reasonable for the market to assign a 'vision premium.'

Second source: Sovereign asset + strategic positioning premium. SpaceX is no longer merely a commercial enterprise; it has becomea U.S. national strategic asset.With $22 billion in government contracts, the Human Landing System (HLS) for lunar landings, classified reconnaissance constellations for the National Reconnaissance Office (NRO), and the Golden Dome missile-tracking program—SpaceX is now deeply embedded in U.S. national security infrastructure. Amid accelerating fragmentation of the global communications order (into U.S., Chinese, and third-party spheres), Starlink automatically acquires 'soft sovereignty' in every market it serves. The full monetization potential of this status may take over a decade to realize, but the premium is undeniably real.

Third source: retail investors' yearning for heroic narratives + personal cult around Musk. This factor is the hardest to quantify, but anyone familiar with capital markets knows its power. Musk has 200 million followers on X; he himself is a market-cap variable. The SpaceX story—a private company sending humans to Mars, building global internet, and making humanity a multiplanetary species—isthe most heroic business narrative of the past 50 years。

Retail investors aren’t buying EBITDA—they’re buying a ticket to participate in history.

The first two premiums are 'real, but slow'; the third premium is 'large, but fragile.'. The current $1.75 trillion valuationsimultaneously bets that all three factors hold true and encounter no issues. This is a difficult combination to sustain.

Assuming SpaceX completes its IPO in the second half of 2026, the next 3–5 years will likely look like this:

Scenario A: Valuation realization (probability ~25%)。Starship V3 Successful maiden flight in 2027, stable operations beginning in 2028, and the first gigawatt-scale space computing contract materializes in 2028.Lunar commercializationProgressing according to NASA’s timeline. Starlink growth slows but is offset by aviation, maritime, and D2C these three segments compensating for the residential market slowdown. The $1.75 trillion valuation starts to look cheap in this scenario—markets would re-rate it toward $2–3 trillion.

Scenario B: Valuation stagnation with sideways movement (probability ~50%). Starship delivery progresses slower than expected—5 successful test flights out of 25 in 2025 equals a 20% success rate. If this pace continues through 2026–2027, V3 may not reach full maturity until 2029–2030. Starlink growth decelerates to +20% annually. The xAI-Anthropic agreement generates real cash flow, but no second major contract follows. Markets realize that 'the narrative is ahead of reality,' leading to valuation oscillation between $1.2 trillion and $1.8 trillion for 3–5 years. This isHighest probabilitythe scenario.

Scenario C: Valuation rediscovery (probability ~25%). Starship continues to face delays, xAI is clearly lagging in the AI race, and personal risk events involving Musk (health, reputation, political exposure) have been triggered. Sentiment-driven valuation premiums are rapidly contracting. The market is repricing using financial models—valuation has fallen back to the $800B–$1.2T range, equivalent to "a reasonable valuation appropriate for an outstanding industrial company". This scenario is actually favorable for long-term holders—but implies a 30–50% paper loss for retail investors who bought in after the IPO.

Probability-weighted outcome = 0.25 × upside + 0.50 × sideways + 0.25 × downside ≈ Expected value of $1.3–1.5T, below the IPO filing valuation of $1.75T。

Weighting the three scenarios by probability,the expected midpoint of SpaceX’s valuation over the next 3–5 years is approximately $1.3–1.5T——which is below the current IPO filing valuation。

In plain terms:Buying at $1.75T on IPO day implies a negative expected return over five years.The inevitable outcome after weighting the three scenarios by their probabilities,In the most likely scenario, you get no return; in the worst-case scenario, you lose 30–50%; and only with a 25% probability do you make money.

As Charlie Munger would say: this is not a bet with favorable odds.

SpaceX is a great company,but a great company does not mean its stock should be bought at any price.. ThisThese two things must not be conflated.

Many people also believed Tesla was 'worth buying at any price' at the end of 2021—when its market cap stood at $1.2 trillion. Over the next two years, Tesla’s valuation dropped 70%, from $1.2 trillion to $400 billion. This wasn’t because Tesla became a bad company—it remains an outstanding electric vehicle manufacturer. The reason was thatthe price had run far ahead of fundamentals。

SpaceX’s current situation is highly similar to Tesla’s at the end of 2021—and potentially even riskier, given that SpaceX carries a higher 'vision premium,' tells a grander story, and may attract deeper retail investor participation.

If you genuinely believe in SpaceX's long-term vision and are willing to hold for more than 10 years without selling, buying at the IPO price may be fine—the company will likely be worth significantly more a decade from now. But if you're expecting the stock to double within 1–3 years after purchase, the math isn't on your side.

A more rational strategy is:

Don’t chase the price on IPO day

For any mega-IPO, the first-day premium is usually the highest

Wait until at least one of the following three things happens:

Starship V3 achieves stable operations, the first gigawatt-scale space computing contract is signed, or the market valuation falls below $1 trillion

If you must buy now, limit your position size

Don’t treat it as a 'sure bet'—it isn't. It’s an investment with meaningful long-term uncertainty of roughly plus or minus 30%.

The greatness of a company isFacts; whether a stock's price is reasonable ismathematics. Facts do not change, but the math changes every day. In SpaceX’s current valuation structure, financial models can only explain half of it—the other half consists of market sentiment, sovereign status, and personal cult appeal. This component isn't nonexistent, butit is fragile。

After the IPO, one thing will happen: retail investors will start measuring the company by its quarterly earnings. The first quarterly report, then the second, then the third—each will force the market to reconcile the 'story' with 'reality.' This reconciliation process is usually unfriendly to short-term valuations.

If you’re buying the company—the great industrial entity, the foundational infrastructure for humanity post-Starship, a sovereign asset—then the IPO price is just one data point in a 20-year marathon; there’s no need to obsess over it.

If you’re buying the story—participating in history, following a hero, believing that we will ultimately become a multiplanetary species—then please acknowledge this as consumption, not investment.Consumption can be expensive, but you should know what you’re doing.

A company can be the best in the world, while its stock can simultaneously be overvalued by $1.25 trillion. Both statements are true, but they must be viewed separately,Distinguish clearly whether you're buying a company or a story.

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