ELISSA NADWORNY, HOST:
SpaceX had the largest initial public offering in history yesterday. At the closing bell, it was valued at more than $2 trillion, making it one of the largest companies on Earth by valuation. But is SpaceX really worth that much money? Joining me to discuss this is NPR's Geoff Brumfiel. He's been following the space launch company for years and has been covering the IPO. Hello.
GEOFF BRUMFIEL, BYLINE: Hi, Elissa.
NADWORNY: OK. So just remind us how SpaceX got its start. Where did this company come from?
BRUMFIEL: Yeah. It was founded by Elon Musk in 2002. It made its name building these really cool reusable rockets that could sort of shoot up to space, and then the booster could come back and land on Earth. These rockets ended up even taking astronauts to the space station. But the thing is, the rocket business really isn't all that big. Only about $10 billion a year globally is spent on launching things into space. So a few years ago, SpaceX started a satellite internet business called Starlink. And...
NADWORNY: Oh, yeah.
BRUMFIEL: Elissa, you probably used that in Ukraine, right?
NADWORNY: I did. That's right.
BRUMFIEL: Yeah. Well, that one turns out to be a moneymaker, but it's still not enough to justify this valuation. So this year, SpaceX remade itself into an AI company. In February, it acquired xAI. That's Elon's other AI company. And a lot of this valuation rests on AI making the company a lot of money going forward.
NADWORNY: In the future. OK. But is SpaceX making money today?
BRUMFIEL: No. It's actually losing tons of money. This is one of the things we found out when it released its financial disclosures. According to those documents, SpaceX lost $5 billion last year and another $4 billion in the first quarter of this year.
NADWORNY: Whoa.
BRUMFIEL: A lot of those losses are due to the AI side of the business. It's been burning cash at an incredible rate. I've been calling it a financial black hole as...
NADWORNY: (Laughter).
BRUMFIEL: ...A bit of a space joke. Now, the satellite internet part of the company and the rocket part are doing better. But as I said, they're still not worth that much money. My colleague John Ruwitch spoke to Morningstar analyst Nick Owens. Here's what he said.
NICK OWENS: We value the base business - the rockets and the Starlink - at $40 a share. And then we did a range of scenarios for what might happen with AI.
BRUMFIEL: And in the end, Owens says he believes, including AI, SpaceX shares might be worth around $63 each. But the closing price on Friday was just under $161.
NADWORNY: Whoa. That is - that's a big difference. Can you explain why SpaceX is worth all this?
BRUMFIEL: I'd say there's two things. First, Morningstar itself admits there's a great deal of uncertainty as to how much the artificial intelligence market is actually worth. It's a new technology. But, second, this is really a bet on Elon Musk. You know, people want to pay for his vision of the future. They hope it'll make them money. And this vision is crazy ambitious. In its financial disclosure documents, SpaceX said - I want to read this to you - "our mission is to build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe and to extend the light of consciousness to the stars." So, you know, that could be worth $2 trillion, I suppose.
NADWORNY: How far along is SpaceX on this actual journey to extend the light of consciousness?
BRUMFIEL: Yeah. As someone who looks at the technical side of things, I do think it's important to note they have a ways to go. They want to fly huge AI data centers into space, build factories on the moon, colonize Mars. And to do all that, they're really depending on a giant new rocket called Starship. That rocket's behind schedule. It's costing billions to develop. We've got some critical tests coming up this year. And I think seeing how well it does and whether they can get into orbit - that should tell us more about the company's future.
NADWORNY: That's NPR's Geoff Brumfiel. Thanks, Jeff.
BRUMFIEL: Thank you, Elissa. Transcript provided by NPR, Copyright NPR.
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