Forget $3.5 trillion for SpaceTaxi. Or Xfinity. (How long before Elon Musk buys Comcast just for the naming rights?) Or whatever we’re going to call the SpaceX-Tesla rollup. How about $20 trillion for SpaceX by itself?
If that sounds otherworldly to you, you’re not alone. JonesTrading’s Mike O’Rourke — whose acerbic editorial cadence blurs the line between caustic sarcasm and outright angry indignation — thinks it sounds pretty nuts too.
One of several “highlights,” if that’s the right word, from SpaceX’s earnings call was Elon Musk’s extrapolatory revenue projection.
The call kicked off with Musk running through everything that’s happened at the company recently. If you missed it, his remarks could’ve served as the opening crawl of a sci-fi movie, the words tilted back and scrolling upward into the starry distance, à la Star Wars.
At the tail end of that monologue, Musk said the following:
So I mean, in a nutshell, what this implies for SpaceX annual recurring revenue by the end of 2027 is somewhere between $500 billion and $1 trillion. Bret? Are you going next?
“Bret” is Bret Johnsen, SpaceX’s CFO. And he was due an apology. Because when you’re the numbers guy at a major, publicly-traded corporation and your CEO says something like that in public, let alone on an analyst call, it puts you in a weird spot.
“Sorry,” Musk added. “I thought on that crazy note — I thought –” Gwynne Shotwell, Musk’s official No. 2, chimed in, echoing Musk for comedic effect: “On that crazy note.” “Yes, I don’t want to give Bret a heart attack,” Elon said.
As the above-mentioned O’Rourke noted shortly after the SpaceX call ended, investors this year have decided, in their infinite wisdom, “that the appropriate valuation for a frontier lab is 15x to 20x the annualized [revenue] run rate.” But that’s not what Musk was referring to. Although the initialism might be the same, annual recurring revenue is, as O’Rourke put it, “a stronger form” of sales “that typically reflects some type of multiyear contract.”
Setting the distinction aside and applying the same valuation “methodology” (and I use that term very loosely) market participants are using for Anthropic and OpenAI, Musk’s revenue projection would “create a bear case market capitalization of $7.5 trillion,” O’Rourke chuckled, “and a bull case market cap of $20 trillion.”
Musk, then, is essentially suggesting that SpaceX on its own will (or should) be 50% more valuable than Nvidia or Apple are today by the end of next year at the low-end. At the high-end, SpaceX would be worth double the combined current market cap of those two companies.
O’Rourke summed it up as only he can. “Not that anyone should need this type of context, but the entire S&P 500 [only] has a market capitalization of $69 trillion,” he wrote. “We can understand why anyone chasing AI infrastructure names passed on buying the Brooklyn Bridge: By comparison, it is far too boring.”
