Valuation Challenges and Future Ambitions

It's consider this, where every day we go deep on one big news story Today, SpaceX debuts on the stock market That's the NASDAQ opening bell, Friday morning It was a big day for the tech market and SpaceX and for regular investors who can now buy the company's shares. That is because the SpaceX IPO initial public offering shattered records valued at seventy five billion dollars, and that was before today's trading started. And let me tell you if people had told me this Gonna to happen I was like, Man, you must be smoking some really good crack because I think this company's gonna fail. Watching the opening bell from Starbase in Texas was CEO Elon Musk. In fact, I told people this, I said look, we're probably going to fail, but you know we should give it a try If we don't U if there's not a new company that enters space, We will never be a truly space bearing civilization That historic IPO is likely to make Musk the world's first ionire And while SpaceX is not profitable yet, investors have big expectations for the company in space and artificial intelligence You know, while the other aerospace companies, they buil good rockets and everything, they were simply not pursuing the technology that's necessary to make life multiplanetary to to make to make Star Trek to make All The exciting science fiction futures that we've read about real And that's what SpaceX is all about. is to take the fiction out of science fiction Consider this, one of the world's biggest companies is now publicly traded and it's leaning heavily into space and AI. What does that mean for us humans here on Earth? From NPR, I'm Mary Louise Kelly. M It's consider this from NPR. Elon Musk's company, SpaceX had a banner firstirst day in the stock market. The company is now valued at more than two tririllion That is after an already record breaking IPO. To make sense of it, we are joined by Mpairis Jeff Brumfield, who covers space and John Ruich, who covers tech, high you too Hey there. To the moon, Mary Louise. I hope so. Okay, so John, kick us off. What more can you tell us about this IPO and SpaceX's first day trading? Yeah, the IPO was the biggest in history. SpaceX raised seventy five billion dollars. That's more than twice the previous record And demand was high for the IPO. That was born out actually when it started trading on the NSdAQ today. The stock opened at one hundred and fifty dollars, which was above expectations rose to as high as one hundred and seventy six during the day, lost a little steam and ended just shy of one hundred and sixty one dollars. The bottom line is that it was up over nineteen percent on the day. A lot of early investors and employees in the company got rich today or richer, including Elon Musk. Who is already incredibly insanely rich? How much richer is Elon Musk at the end of today Yeah, it's hard to know exactly, but a little back of the envelope math, you know, Musk owns close to forty percent of SpaceX's shares. So his stake is now worth around eight hundred billion dollars with a B. Plus, he owns a chunk of Tesla shares and has stakes in other companies. so he probably became the planet's first trillionaire today Holy cow. Okay, this closing price has the value of SpaceX well above two. Trillion dollars, trillion with a te. Jeff, you track SpaceX, Is it worth that much I think even SpaceX' supporters would tell you the business as it is today is not worth two trillion dollars According to the financial documents released ahead the IPO, SpaceX is actually losing money. It lost five billion dollars last year and another four billion doars in the first quarter of this year A lot of those losses are due to the AI side of the business, which used to be Musk's other company XAI. It's been burning cash at this incredible rate. It's sort of a financial black hole, if you will Even without the AI losses though, the rocket and satellite company are probably worth far less somewhere in the hundreds of billions of dollars. Yeah, just to add on to what Jeff is saying here, analysts at the investment research company, Morningstar did a deep dive into SpaceX's core businesses. They crunched some numbers around what they think is likely or probable at this moment in terms of the company achieving its goals in space and AI And they think a fair value per share of this company is sixty three dollars, which is a lot less than it is now. Nicholas Owens is a financial analyst at Morningstar. I would argue that for the next week Really, what you're looking at is simple supply and demand. Today, there's limited supply and exuberant demand. On the supply front, the company only floated about four percent of its outstanding shares, so not much in terms of demand, there's a lot of hype and excitement. But even for people who aren't actively buying these shares, SpaceX is likely to end up in their portfolios because it's being included in a few stock indexes earlier than normal So T you, what does the company need to do to actually meet these very high flying expectations Well, I mean, I think the company itself, I would just want to read their vission statement and their documents, Mary Louise because it really gives a sense of their ambition Our mission is to build the systems and technologies necessary to make life multiplanetary to understand the true nature of the universe and to extend the light of consciousness to the stars. That might be worth two tri. No big deal there. Yeah. Yeah, right, exactly The first step to getting to that kind of evaluation is to build this giant rocket called Starship. Now Starship is behind schedule. It's costing the company billions to develop. But if it works, it will reduce the cost of sending things to space. Speaking at the opening bell today, SpaceX President Gwen Shotwell sounded a defiant note as she addressed her employees. She said they've proven the skeptics wrong before the thanks go to all of you for hanging in there for keeping a straight spine as the doubters doubt. But Starship is a lot more complicated than SpaceX's other rockets. So for all these dreams to happen, it's going to take a lot of work. I don't think anyone's ever been able to build a rocket quite like it. We'll have to see what happens. Fth noting Today's IPO is the first of several blockbuster IPOs we expect this year, Jeff. Tell us about those. Yeah, that's right. I mean, the other big two are anthropic and open AI, the big AI companies. They're each ballparked at around a trillion dollar valuations And like SpaceX, there's a lot of fuzziness about how much they're actually worth. A lot of this comes down to we don't really know just how big the market is for AI or what it's going to be used for So you know, a lot of this stuff is really betting on the future, I'd say John just to let you land us and circle back around to the possibly as of today trillionaire Elon Musk. I mean we've talked a lot about that just how much money that is. But how much more powerful is he as a result of this IPO? I think you could say a lot. know when companies go public like this and start selling shares to ordinary people, it usually means that those investors will be able to have more say in how companies run But here the investors will have very limited ability to check Musk. He has an iron grip on the company. know he's CEO He will control the board of directors. He holds more than eighty percent of the voting power of shareholders Elon Musk obviously has his fans. There are a lot of believers, there a lot of people buying the stock today because they think his vision is brilliant, frankly He's highly controversial also. And so I think today he ends up more powerful in some ways than ever And you' really put himself at the center of his own universe. And here's John Ruich and Jeff Brumfill. Thankks to you both S want you This episode was produced by Alejandra Marz Hane with Audio Engineering by Ted Meebane and Becky Brown. It was edited by Courtney Dorning and Patrick Jaron Wadinanin. Our interim executive producer is Courtney Dorning And a big thank you to our Consider this pllus listeners who support the work of NPR journalists and help keep public radio strong. Supporters also hear every episode without messages from sponsors and unlock bonus episodes of Consider this, you can learn more at plus. npr. org Let's consider this from NPR I'mary Louise Kelle