SpaceX IPO and Wall Street is digesting the largest public offering in financial history.
Now Elon Musk's SpaceX raising a staggering $75 billion IPO.
The company is set to start trading today at the Nasdaq undertooker symbol SPC.
Now retail traders and passive funds have already flooded the book. $100 billion in demand aiming to buy into a company valued at a mind boggling nearly $1.8 trillion and some critics have slammed the take it or leave it $135 share price and recent neutral free cash flow while here to break down the numbers beyond the hype is Daniel Maguire, Research Analyst, Autonomous Technology & Robotics at ARK.
Good morning, Dan.
Great to see you.
Thank you so much for joining us.
So first and foremost, there's so much anticipation ahead of SpaceX listing on the NASDAQ and starting trade.
So do you think when it comes to the company, SpaceX is justified in commanding this unprecedented strategic premium.
What are your expectations?
Yeah, great to see you, Remy.
And firstly, I'd state that Arc invests over a longer time horizon, 5 years.
We've been invested in SpaceX for some years now, and this is a company that we've been following very closely since ARC's inception in 2014.
And Remy, back then, let me tell you, people were laughing at the idea of reusing rockets.
Fast forward to today, SpaceX commands a 10 year lead on the industry.
That is a matter of fact, it's not up for debate.
SpaceX landed a booster in 2015.
Its closest competitor, Blue Origin, landed one in 2025.
We also expect this 10 year lead to accelerate with Starship, it's fully and rapidly reusable rocket, and we suspect that it'll be very difficult to catch them.
After all, it is rocket science, and that is exactly why SpaceX is the number one holding in our venture fund, ARKVX.
Yes, and Dan, because you have been following this company so closely, tell us about the TAAM, the total addressable market here.
And usually when we're looking at publicly traded names or other companies we have comps, right?
But when we take a look at the pillars of the SpaceX business, how are you looking at the TAAM?
Yeah, so the SpaceX IPO really is an AI story.
Uh, SpaceX in its S1 identified a $28.5 trillion TAMM.
Over 90% of that relates to artificial intelligence, and they're really positioning themselves as an AI vertically integrated player.
And while there's not a lot of noise around the evaluation, just to put some context for the viewers, Rey, um, so SpaceX is aiming to launch 100 gigawatts per year to orbit of compute.
For context, that's the equivalent of 100 large nuclear reactors.
Today on Earth, for 1 gigawatt, you can lease your compute for $15 billion in annual revenue, we believe.
And moreover, if you're vertically integrated, like SpaceX is intending to be, you can monetize that at a roughly $30 billion per gigawatt per year monetization rate.
Again, SpaceX is intending to launch 100 gigawatts per year.
So hopefully that just provides some context to the viewers on how enormous this opportunity is, and really why we think SpaceX is in the early innings of its value creation cycle.
Yes, and I also do want to expand on this and get your take on Starlink.
So there are short sellers out there that are pointing to SpaceX's recent operating losses.
So your research does focus on satellite connectivity.
So with Starlink crossing 10 million subscribers and on track for approximately $20 billion in revenue this year, how quickly does Starlink evolve into the cash engine when it comes to SpaceX here?
Yeah, well, we would say it already is the cash engine funding all of SpaceX's ambitious rocket development plans.
And really that comes down to launch costs, Remy.
So, uh, Starship is central to the SpaceXS1.
At Arc, as you mentioned, we're very focused on rights law and steep cost decline curves.
Our research suggests that SpaceX has cut launch costs by roughly 95% since 2008.
That has enabled Starlink.
They've surpassed over 12 million active subscribers, as you mentioned.
It is the cash flow generator funding all of their ambitious plans.
However, with Starship now moving to full reusability, we think they could cut launch costs by another order of magnitude, from around $1000 per kilogram today to less than $100 per kilogram.
And that's why you hear a lot about orbital data centers.
Not economically possible today, but Starship is really critical for making that future possible with SpaceX.
And that's why it was a prominent feature feature in their S1 filing a couple of weeks ago.
And I do want to also move into the orbital compute segment of this.
The February merger of SpaceX, as well as XAI did take the market by some surprise, coming with the ambition to launch that 100 gigawatts of compute into space per year.
So how realistic is this and for the lay person who's trying to actually understand the impact and the implications of this, can you translate what's going on here?
Yeah, of course.
Uh, well, firstly, I'd say that it stems really from a bottleneck for a lot of AI hyper scales today is access to chips, but also access to power.
If you want to connect to the US grid today, it's a 5 year time horizon.
Uh, nuclear is a compelling solution.
That's really a 20-30 plus timeline.
Gas turbines sold out till the end of the decade, and a lot of NIMBYism or not in my backyard for building data centers outside of the grid.
So the concept with orbital data centers is you bypass all of that, you launch a satellite into sun sink.
Synchronous orbit, you essentially get free energy from the sun, and you can launch compute.
And again, this is really where SpaceX has that 10 year lead.
They really are the only launch provider capable of launching at scale to hit that 100 gigawatts per year capacity that I mentioned, and why we think it's really a compelling investment opportunity.
Yes, and Dan, of course for retail investors out there, the other mega IPOs coming down the pike, giants like Anthropic as well as OpenAI are looming in the pipeline.
So an enormous wave of public equity is surging into the market, or that is expected.
So do you think there's enough institutional as well as retail liquidity to sustain this appetite right now?
Absolutely.
AI is really one of the once in a lifetime investment opportunity for a lot of investors.
As you mentioned, OpenAI potentially anthropic, SpaceX, er today, and really from Arc's perspective, uh, this is just the chance to really move innovative companies from the private market.
That's why we originally set up our venture fund to get access to those companies, and now it's exciting to see them develop from the private market and into the public market.
And you just mentioned the funds so very quickly before I let you go, how will the crossover fund utilize its expired lockups to rebalance as well as redeploy capital into the next wave of innovation.
Yeah, sure.
So for portfolio management decisions, I, I tend to defer to our portfolio management team.
What I can say that the fund targets an 80/20 split, 80% private, 20% public, uh, the, uh, and that's kind of what we're targeting at the moment.
And then we'll develop as SpaceX trades in the public market starting today, which we're very excited to monitor.
Well, Dan, we will have to leave it there.
Thank you so much for joining us on this historic day for IPOs and weigh in on SpaceX.
I appreciate your time.
Have a great weekend.
Thanks, Remy, great to see you.
