Elon Musk’s SpaceX is back on Earth.
The richest man in the world‘s satellite-cum-rocket-cum-artificial-intelligence company was launched into the stratosphere last month with the largest initial public offering in history.
Buoyed by Musk’s lofty promises — of data centers in space and a million-strong colony on Mars — the company’s value soared to $US2.5 trillion ($3.6 trillion) in mid-June.
But when SpaceX shares briefly dipped below its IPO price of $US135 on Wednesday, it was a sign that the momentum that kept Musk going was short-lived. the first billionaire in the world had decreased.
It was also a sign that investors were starting to price in a more dire reality: one where SpaceX has lost $13 billion since 2023, and where Musk is essentially asking them to “trust me bro” about whether his grand vision for the future will come true.
By now, you’d be forgiven for thinking that SpaceX has all the hallmarks of a “meme stock” — a company whose stock prices are driven by internet hype rather than anything tangible.
All the ingredients are there to shoot SpaceX’s stock price into the stars. But Musk’s own behavior makes the whole thing seem very flamboyant.
The truth is, it’s hard to get a clear understanding of SpaceX’s true value since Musk’s promise, along with all his astronomical ambitions, is full of contradictions.
World data centers and Martian colonies look like the stuff of space opera. But the success of Starlink, SpaceX’s satellite networking business, which is the world’s fastest-growing communications company and accounts for two-thirds of the business’s revenue, is real.
And because much of SpaceX’s hype is fueled by a belief in its role as a growth piece of AI infrastructure, its lasting success depends on whether the technology will lead to eternal growth, or a bursting bubble.
But also key to the uncertainty surrounding SpaceX is Musk’s own behavior. Since the tragedy, he has gone far to the right, espousing all sorts of conspiracy theories, including the belief that “elites” are using immigration to keep western civilization alive.
As the political feud with Donald Trump reached its inevitable conclusion last year, Musk is, like the president, a notorious online fugitive, who seems to spend a lot of time fighting on X, the social media platform he owns – and, allegedly, ingesting heroic doses of Ketamine. (Musk has said he has taken Ketamine to treat his depression, but has denied abusing the drug.)
Like Trump, Musk has cast himself as a reactionary protagonist, whose entire demeanor is so divisive that neutrality becomes impossible. Any opinion on Musk is primarily political. In addition, so is any opinion on SpaceX.
It is not surprising, then, that Gina Rinehart, the richest person in Australia, quickly. took a $US1 billion ($1.4 billion) stake. at SpaceX, its largest non-ferrous metal investment, just days after it floated last month.
The mining giant shares Musk’s embrace of far-right politics. And like Musk, he’s rich enough to throw his money at causes that are kind of conservative virtue symbols.
Of course, it would be absurd to suggest that SpaceX’s stock price is driven by the right of the favorite. After all, James Murdoch, the black sheep of the News Corp dynasty, owns about $7.5 billion of SpaceX stock thanks to three strategic purchases through his private investment firm in 2019 and 2020.
Murdoch’s younger son’s more progressive politics have been a source of friction with his father Rupert, but it hasn’t stopped him from remaining friends with Musk, and sitting on the board of his electric car maker Tesla. After all, Musk has made Murdoch richer than his father.
But the buzz that follows Musk is another small twist in the SpaceX story.
Even removing politics from the equation, it may take some time before the market gives a real sense of SpaceX’s value. Only about 4 to 5 percent of the company’s shares are currently tradable, with the rest still locked up among company insiders, a level of scarcity that has boosted the stock price.
Recently, the stock joined the Nasdaq100a technology-heavy index for the US stock market, whose membership forces funds to track the index to buy stocks and increase prices further.
SpaceX only exists because this year, Nasdaq changed its rules to speed up the company’s entry into the index. Musk’s companies will continue to thrive as long as the world continues to lean toward his wishes.
“(The) Nasdaq has manipulated and changed the country’s laws so that they can squeeze it into the Nasdaq index despite the fact that it has no income,” experienced British investor Jeremy Grantham recently told a podcast.
He also called SpaceX’s float “the craziest IPO in human history.”
The point is that all the ingredients are there to shoot SpaceX’s stock price into the stars. But the character of Musk himself – a bombastic showman, with a volatile personality and a penchant for provocation – makes the whole thing seem very flamboyant.
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Kishor Napier-Raman is senior business writer for The Sydney Morning Herald and The Age. He previously worked as a CBD reporter and journalist in the press gallery of the federal parliament.Connect through X or email address.
