Elon Musk’s SpaceX has come crashing back down to earth.
The world’s richest man’s satellite-cum-rocket-cum-artificial-intelligence company launched into the stratosphere last month with the largest initial public offering in history.
Buoyed by Musk’s celestial promises – of data centres in outer space and a million-strong colony on Mars – the company’s value soared to $US2.5 trillion ($3.6 trillion) by mid-June.
But when SpaceX’s stock briefly dipped below its IPO price of $US135 on Wednesday, it was a sign that the propulsive hype which briefly made Musk the world’s first trillionaire had slowed.
It was also a sign that investors had started to price in a more sobering reality: one where SpaceX has lost $US13 billion since 2023, and where Musk is essentially asking them to simply “trust me bro” about whether his grand vision of the future will materialise.
At present, you’d be forgiven for thinking that SpaceX bears all the hallmarks of a “meme stock” – a company with share prices that are driven by internet hype rather than anything tangible.
All the ingredients are there to shoot SpaceX’s share price into the stars. But the character of Musk himself makes the whole thing seem very combustible.
Truth is, it’s tricky to get a clear-eyed sense of SpaceX’s true value since Musk’s promise, for all its astronomical ambition, is riddled with contradiction.
Cosmic data centres and Martian colonies appear the stuff of space opera. But the success of Starlink, SpaceX’s satellite internet business, which is the world’s fastest growing telecommunications company and accounts for two-thirds of the business’s revenue, is real.
And because a fair chunk of the SpaceX hype is fuelled by a belief in its role as a piece of the AI infrastructure boom, its enduring success relies on whether that technology delivers forever growth, or a burst bubble.
But also key to the uncertainty around SpaceX is the character of Musk himself. Since the pandemic, he has swung hard to the far right, validating all manner of conspiracy theories, including the belief that “elites” are using immigration to hollow out western civilisation.
While the political bromance with Donald Trump reached its inevitable fractious conclusion last year, Musk is, like the president, an inveterate internet troll, who appears to spend too much 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 in effect made himself a reactionary main character, whose entire persona is so polarising that neutrality becomes impossible. Any opinion on Musk is essentially political. By extension, so too is any opinion on SpaceX.
It’s unsurprising, then, that Gina Rinehart, Australia’s richest person, swiftly snapped up a $US1 billion ($1.4 billion) stake in SpaceX, her biggest non-iron ore investment, just days after last month’s float.
The mining magnate shares Musk’s embrace of far-right politics. And like Musk, she is wealthy enough to throw her money toward causes that are forms of conservative virtue signalling.
It would, of course, be absurd to suggest that SpaceX’s share price is driven solely by the populist right. After all, James Murdoch, the black sheep of the News Corp dynasty, owns an estimated $US7.5 billion of SpaceX stock thanks to three strategic purchases through his private investment firm in 2019 and 2020.
The younger Murdoch son’s more progressive politics have been one source of a falling out with his father Rupert, but have not stopped him from remaining friendly with Musk, and sitting on the board of his electric car manufacturer Tesla. After all, Musk has made Murdoch far richer than his father ever did.
But the roar of noise that follows Musk is another little twist in the SpaceX story.
Even taking politics out of the equation, it could be some time before the market provides a true sense of SpaceX’s value. Only around 4 to 5 per cent of the company’s stock can currently be traded, with the rest still locked up among company insiders, a level of scarcity that has pushed up the share price.
More recently, the stock joined the Nasdaq100, a tech-heavy index for the US sharemarket, membership of which effectively forces funds tracking the index to buy the shares and further inflating the price.
SpaceX is only there because this year, the Nasdaq changed its rules to effectively expedite the company’s entry to the index. Musk’s companies will continue to boom so long as the world keeps on bending to his will.
“[The] Nasdaq has cheated and changed the laws of the land so that they can squeeze it into the Nasdaq index despite the fact it has no earnings,” seasoned British investor Jeremy Grantham recently told a podcast.
He also called the SpaceX float “the craziest IPO in the history of man.”
The point is that all the ingredients are there to shoot SpaceX’s share price into the stars. But the character of Musk himself – a bombastic showman, with a volatile personality and a penchant for the provocative – makes the whole thing seem very combustible.
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Kishor Napier-Raman is a senior business writer for The Sydney Morning Herald and The Age. Previously he worked as a CBD columnist and reporter in the federal parliamentary press gallery.Connect via X or email.
