When valuing a stock, it is hard enough to work out how many sports cars, aeroplanes or pairs of jeans the world will want years from now. But how about estimating the cash flows from putting a million humans on Mars?
Elon Musk’s SpaceX, which filed for an initial public offering on Wednesday, presents investors with that puzzle. Its finances today are of no use in working out what the company is worth. At the valuation of $1.75tn previously reported by the FT, SpaceX would be the US stock market’s seventh-biggest company; but ranked by its revenue of $19bn a year, it would be 200th, on a par with Lucky Charms cereal maker General Mills.
Investors must therefore make assumptions about a business whose mission is to “extend the light of consciousness to the stars”. SpaceX’s three parts are its satellite communications business Starlink, which makes up most of the group’s revenue and is already profitable; a space division, which is small and lossmaking; and an even more lossmaking AI segment, which includes social network X and some enormous data centres.