Financial analyses suggest that SpaceX is currently massively overvalued. Nevertheless, the share exerts an enormous pull. The crux of this fascination lies less in the figures than in the narrative that accompanies them: the promise of simply shifting our resource-intensive lifestyle into space with the help of technology – without fundamentally changing our behaviour.
Valuation bears little relation to reality
Since its IPO on 12 June, SpaceX has been among the ten largest companies in the world. Based on market capitalisation, it even held fifth place for a while; despite the recent sharp fall in its share price, it still ranks seventh. Not bad for a company that reported a loss of USD 5 billion last year. By way of comparison: SpaceX’s market capitalisation is now roughly on par with that of Taiwan Semiconductor Manufacturing Company (TSMC), which made a profit of USD 55 billion last year.
Space Exploration Technologies Corporation, or SpaceX for short, builds and launches rockets. The company also comprises Starlink, which provides internet services via satellites, and the artificial intelligence firm xAI, which includes the social media platform X. Of all these divisions, Starlink is currently the only profitable one. To justify SpaceX' current valuation, there must therefore be exceptional profit potential.
According to SpaceX itself, this is indeed the case. The company claims to have identified the largest Total Addressable Market (TAM; the total revenue opportunity available for a product or service if it achieved 100% market share) in human history: USD 28.5 trillion, more than a fifth of global gross domestic product. Of this, USD 26.5 trillion is expected to come from AI applications, primarily for businesses.
The real attraction is the narrative
However, various analyses suggest that these estimates are extremely optimistic. Based on available market data, a more realistic estimate appears to be just 1 per cent of the assumed potential market. And based on its current valuation, Starlink would ultimately have to account for 80 per cent of the global market for internet services.
Nevertheless, investors remain enthusiastic. Hardly because of the financial metrics, but rather because of the narrative offered by Elon Musk. His vision of the future: artificial intelligence, space colonisation and radical technological innovation seem to break down planetary boundaries. Given the current geopolitical tensions, the increasingly palpable climate crisis and growing uncertainty, this is an attractive prospect for many.
Happy few or happy many?
But whether space colonisation would actually relieve the pressure on Earth is highly questionable. It is difficult to see why the appropriation of space by the richest man in the world would solve the fundamental problems on Earth. We would do well to view space as a domain that is closely intertwined with the Earth’s ecosystem and that reflects the social problems on the planet, rather than as a distant refuge destination or a new territory to exploit.
Take the AI data centres Musk has in mind. These would require no fewer than a million satellites. The Starlink network currently has fewer than 10,000 satellites. Such an expansion would significantly increase pollution from satellite debris. Researchers warn that these emissions could affect the composition of the atmosphere and damage the ozone layer.
But whether they succeed or not, Musk’s plans have made him an extraordinarily wealthy and powerful man. SpaceX’s IPO made him the world’s first trillionaire. Together with a number of like-minded individuals, he is gaining ever-greater control over crucial infrastructure, communications and information systems. SpaceX’s market value rests largely on expectations of a distant future. As long as investors continue to believe in it, that promise translates into ever-increasing financial and political clout for Musk.
Coincidentally, the Global Justice Report – authored by, amongst others, leading economist Thomas Piketty – was published just before SpaceX’s IPO. This report, too, paints a picture of the future, albeit one that is fundamentally different: by the year 2100, climate change and extreme inequality have been brought under control. Ninety per cent of the world’s population has seen their income double, works far fewer hours and benefits from a liveable planet. Virtually everyone is better off when not only income, but also leisure time and a habitable Earth are taken into account.
Unlike Musk’s tehcnological leap into space, Piketty’s plan does not rely on crossing physical boundaries, but on historical productivity trends. The path to achieving this involves rapid decarbonisation, fewer working hours, less overconsumption and a fairer distribution of income, wealth and power. Although thoroughly calculated, Piketty's plan is dismissed as unrealistic or even dangerous at least as often as Musk’s.
This raises the question of whose interests are at stake here. For the world’s wealthiest, Musk among them, reforms such as suggested by Piketty are indeed unattractive. Unlike the vast majority of the population, they would be relatively worse off as a result. It is therefore not surprising that it is precisely this group of people that present speculative visions of space colonisation and unlimited economic expansion as realistic.
It is up to us as society and as responsible investors to choose which narrative we place our trust and our money in. In a vision of the future that is primarily the dream of the richest man on earth? Or in a vision of the future based on what is physically, socially and economically possible, and from which virtually everyone stands to benefit.
