SpaceX’s forthcoming IPO has captured global investor attention, with reports suggesting a valuation of around $1.75 trillion and a raise of up to $75 billion.
David Coombs, multi-asset fund manager at Rathbones Asset Management says, “SpaceX is undoubtedly one of the most innovative companies of our generation, but extraordinary businesses are not attractive investments at any price. The figures attached to this IPO are eye-watering, with a price-to-sales ratio of roughly 113 times. For context, Tesla trades at about 16 times last year’s sales. Even Nvidia, the poster child of the AI boom, sits at 25-30 times.”
Coombs acknowledges SpaceX’s strengths: “Starlink is an exceptional asset boasting more than 10 million subscribers, an estimated $11.4 billion in revenue last year and roughly 65% of all active satellites in orbit.”
But strong businesses can still be poor investments if the price is too high. For the Rathbone Multi-Asset Portfolios, the merger of SpaceX with xAI, Elon Musk’s artificial intelligence venture, adds another layer of risk. The IPO filings revealed that xAI saw an operational loss of $6.4 billion against revenues of just $3.2 billion in 2025.
“xAI is burning cash like a rocket burns fuel, so, the question is not whether space is exciting, but whether we can gain exposure through companies that are already making real money. We remain disciplined and focused on companies with durable competitive advantages that are already turning growth in the space economy into sustainable revenues and cash flow.”
“When a company of this size comes to market, passive funds become forced buyers, helping to underpin demand in the secondary market. In SpaceX’s case, that effect is amplified by Elon Musk’s profile and the appeal of the space theme itself, which is likely to attract significant retail investor interest.
“As active managers, our job is not simply to identify the market’s most exciting companies. It is equally important to avoid investments where expectations have moved too far ahead of fundamentals. Markets can remain enthusiastic for some time, but eventually valuations matter.
“We approach opportunities like SpaceX cautiously. The excitement is understandable and there will be no shortage of positive news flow around the transaction. The shares may perform strongly after listing, but when we assess the growth forecasts, execution risks and valuation together, the investment case is much harder to justify.”
Rather than investing directly in highly valued space ventures, Coombs favours the ‘picks and shovels’ businesses underpinning the industry’s expansion. An example is Linde, which supplies liquid oxygen for the majority of US commercial rocket launches, to Amphenol and Parker Hannifin whose components and systems are used across aerospace and satellite infrastructure.
Telecommunications providers, cloud computing platforms and digital infrastructure companies are increasingly integrating satellite capabilities into their service offerings. Deutsche Telekom, via T-Mobile US, is benefiting from the direct-to-cell satellite connectivity, while Microsoft is expanding cloud services linked to satellite networks. Alphabet, which also maintains an equity stake in SpaceX, is exploring future orbital data centre applications.
“The space economy extends far beyond rockets and satellites,” adds Coombs. “Many of the most attractive investment opportunities lie in the companies that make the ecosystem function.”
“We have seen many ‘once-in-a-generation’ IPOs over the past four decades,” says Coombs. “The best investment outcomes do not usually come from chasing the headline story. For this IPO, we prefer owning the businesses supplying the fuel, connectivity, engineering and technology that enable these transformational trends to develop.”
“While we recognise SpaceX as an impressive and strategically important business, the valuation, optimistic growth assumptions, execution risk and governance considerations mean we are not minded to invest at this stage.”
