Starship test flight "successfully halfway"! SpaceX holds on to nearly $2 trillion valuation in final test before going public.

SpaceX's Starship made significant progress in its 12th test last Friday, enough to maintain the optimistic expectations of the market for Elon Musk's commercial space giant, which is preparing to go public, with a valuation of up to $1.75 trillion. However, the test also showed that the Starship still has a long way to go in achieving "full reusability". On May 22nd, SpaceX completed the 12th test flight of the Starship at its Starbase in Texas, a significant milestone as it marked the first appearance of the third-generation Starship configuration and the final large-scale technical demonstration before SpaceX goes public. The spacecraft successfully deployed a batch of simulated satellites and completed a controlled splashdown in the Indian Ocean, but the "Super Heavy" booster experienced multiple engine failures during the retro-propulsion phase after separation, eventually crashing into the Gulf of Mexico in an uncontrolled state. While the test flight achieved all its objectives, the failure of the booster recovery needs to be addressed in future flights. This indicates that the path to full reusability for the Starship still has one last step to go. Despite the imperfect test flight, investors remain enthusiastic about SpaceX as evidenced by the recent surge in the space sector of the stock market. Analysts characterized this Starship test flight as a "lukewarm success," neither a total failure nor a breakthrough. Antoine Grenier, Partner and Head of Aerospace Consulting at Analysys Mason, stated that a "lukewarm success" is a good result, and may even be the ideal one. He said, "A total failure would bring problems, and a total success would trigger huge IPO frenzy in the market." He added that SpaceX must complete this launch before the IPO, as investors would have more questions about the company's execution pace if this test did not take place, given that seven months have passed since the previous flight. Mark Vena, CEO of SmartTech Research, stated, "SpaceX doesn't need this flight to be perfect, it needs to show that the upgraded spacecraft is moving in the right direction, and investors can see that." He added that even though the test was not perfect, as long as it demonstrates measurable progress towards the goal of "full reusability," it is enough to reinforce the investment logic. SpaceX has invested over $15 billion in developing the Starship, with the goal of creating a fully reusable heavy rocket that surpasses existing launch systems in payload capacity. The Starship is crucial not only for reducing launch costs but also for supporting SpaceX's "cash engine" the Starlink satellite business expansion, and future projects such as space-based computing, orbital AI data centers deployment, human lunar missions, and potential Mars missions. Investors, analysts, and fund managers are generally highly optimistic about SpaceX's upcoming IPO. They are betting on Elon Musk the entrepreneur famous for turning high-risk engineering bets into leading business models being able to deliver on the grand promises outlined in the SpaceX IPO filing. James Bruegger, Chief Investment Officer of the British investment firm Seraphim Space, stated, "Full reusability is key to significantly reducing launch costs. The real value is here." While overall market sentiment is bullish, analysts point out that SpaceX still has a long way to go in proving that the Starship can operate on a large scale reliably and economically. Austin Moeller, Managing Director of Equity Research at Canaccord Genuity, stated, "Clearly, SpaceX needs to demonstrate that it can successfully complete launches, deploy payloads, operate in orbit, and successfully land boosters and spacecraft to achieve large-scale system deployment and build orbital data center superconstellations." It is worth mentioning that SpaceX itself has warned that delays in development progress or inability to achieve cost targets could hinder the deployment of next-generation satellites and AI infrastructure, as this would increase overall costs. This also echoes concerns of some investors that the Starship may fall into a cycle of "repair-fail-repair" and never prove its end-to-end operational capability. However, Jesse Nacht, Research Assistant at MarketVector Indexes, stated, "With this Starship launch, it reduces the market's bearish risk of the Starship falling into a cycle of failure. This does not mean that the execution risk has been completely eliminated. But unless an extremely catastrophic accident occurs, I do not think this will fundamentally change market expectations." The largest IPO in history is approaching! SpaceX's highly anticipated IPO roadshow is scheduled to start on June 4th, with pricing on June 11th, and official listing on June 12th. The valuation target for this IPO is quite impressive. According to market estimates, SpaceX's target valuation is between $1.75 trillion and $2 trillion, with a fundraising size of up to $75-$80 billion. If successful, this will be the largest IPO in global financial history, exceeding the record of $29.4 billion raised by Saudi Aramco in 2019 by over double. According to the prospectus, SpaceX's combined revenue for the 2025 fiscal year reached $186.7 billion, with adjusted pre-tax profit of $65.8 billion, but a net loss of $49.4 billion. The main reason for the loss is the massive investment in the AI sector xAI had capital expenditures of $12.73 billion in 2025, mainly for purchasing NVIDIA Corporation (NVDA.US) chips and building the Colossus supercomputing center in Memphis, with an operating loss of $6.36 billion in the AI sector that year. In 2026, AI-related investments increased further, with the AI sector accounting for over three-quarters of the $10.1 billion in capital expenditures for the entire company in the first quarter. Three pillars support the trillion-dollar valuation SpaceX has built a complete commercial ecosystem of "reusable rockets + global satellite internet + deep space exploration," with these three core businesses providing a solid foundation for its valuation. First, the Starlink business is the "cornerstone" of SpaceX's trillion-dollar valuation, as it is the company's main source of cash flow. As the world's largest low-orbit satellite internet constellation, Starlink had launched over 6,000 satellites into orbit by early 2026, with over 120 million paid users globally and coverage in over 180 countries and regions. The business has expanded from personal home broadband to areas such as aviation, maritime, and emergency communications in the B2B sector. Financial data shows that Starlink's revenue in 2025 exceeded $45 billion, with a net profit of over $8 billion and positive operating cash flow. It has a market share of over 85% in the global low-orbit satellite internet market, forming an almost monopolistic situation. It is worth noting that just before SpaceX's IPO, the company secured a major deal with American Airlines Group Inc. (AAL.US) American Airlines Group Inc. plans to install SpaceX's Starlink satellite internet service on over 500 narrow-body aircraft starting in early 2027. This order not only endorses Starlink's technological capabilities but also reflects SpaceX's strategic intent to accelerate its penetration into high-value B2B markets before the IPO. Second, government contracts and commercial launch protect the company's performance. As a core partner of NASA and the US Department of Defense, SpaceX holds massive long-term contracts NASA awarded it a multi-billion-dollar contract for the Artemis moon landing program, and the US Department of Defense is not only Starlink's largest enterprise customer but also provides continuous funding support for Starship development, with total government contracts exceeding $12 billion in 2025. Additionally, SpaceX has a market share of over 80% in the global commercial space launch market, and the reusable technology of the Falcon 9 rocket has reduced launch costs to 1/5 of the industry average, forming a formidable cost barrier and securing steady profits in the commercial launch business. Finally, the synergy between the Starship and space AI opens up long-term possibilities. The Starship, as the most powerful reusable heavy launch rocket in human history, when normalized in launches, will completely reshape the cost structure of space access, laying the foundation for space tourism, asteroid mining, Mars colonization, and more. Recently, SpaceX acquired xAI, a company owned by Elon Musk, in a full stock transaction, integrating rocket technology, Starlink, and AI to build a "space-based data center." By leveraging the CECEP Solar Energy advantages of space, SpaceX aims to reduce the cost of AI computing power, upgrading its valuation from a "space company" to a "space economy full industry chain platform." Multiple hidden risks test market confidence Despite SpaceX's irreplaceable technology and market position, this IPO has been controversial from the outset, with three major risk points becoming the focus of market attention, and determining whether investors are willing to buy into a trillion-dollar valuation. The completion of SpaceX's acquisition of xAI before the IPO is the most controversial variable in this listing. xAI, as a newcomer in the big model track, is in a high-intensity R&D investment period, with monthly operating losses exceeding $300 million, a net loss of over $4 billion in 2025, and no short-term profitability in sight. Market concerns are widespread - the massive burn rate of xAI will be merged into SpaceX's financial statements after this acquisition. This could dilute Starlink's profitability and even lead to a situation where a publicly-traded company buys into a personal project of Elon Musk, damaging the interests of public shareholders. This is also one of the greatest uncertainties of this IPO. Critics argue that if SpaceX is viewed as a loosely structured conglomerate, its valuation may be lower than expected. Musk himself classifies this business combination as a "vertically integrated innovation engine", believing that the synergy between rockets, space internet, AI, and social media, especially in advancing opportunities for space data centers. At the time of completing the xAI acquisition, Musk held less than half of SpaceX's shares. After the xAI transaction is completed, Musk's ownership percentage is still not clear. According to reports, SpaceX is considering using a dual-class equity structure to allow insiders possibly including Musk to maintain nearly absolute control over key strategic and corporate governance decisions after the IPO. This arrangement may not be an obstacle for investors who are optimistic about SpaceX's potential and Musk's track record. However, this structure, with "one share holding all power," may limit the influence of external shareholders significantly if problems arise within the company. Combining with Tesla, Inc.'s past turmoil, this "all-powerful share" structure makes many long-term institutional investors adopt a wait-and-see attitude, fearing the additional risks brought by the uncertainty of personal decisions. The ultra-high valuation of SpaceX has also raised doubts among some. In 2025, SpaceX's private valuation was only $1 trillion. In less than a year, the IPO valuation plan has increased by 75%, corresponding to a market-to-sales ratio of over 25 times the revenue in 2025, far exceeding the average level of mature tech giants. Market analysis suggests that this valuation has already overestimated the growth expectations for the next five years. If Starlink's user growth falls below expectations, Starship development progresses are delayed, or facing increased competition in the global low-orbit satellite industry, it may face pressure for a significant valuation correction. Additionally, factors such as stricter regulations for global low-orbit satellites and catching up with competitors could also affect its growth. In conclusion, the SpaceX IPO, with its massive scale, is expected to reactivate market activity on a global scale, driving more cutting-edge technology companies to enter the capital markets and spark a new wave of tech IPOs. For the commercial space industry, SpaceX's listing will be an important milestone in its development. It breaks the traditional pattern of the aerospace industry being government-led, proving the feasibility of commercializing space, and will propel the upgrading of the rocket manufacturing, satellite internet, space AI, and other related industry chains, transforming the concept of "space economy" into a reality.