SpaceX has transformed the aerospace industry with reusable rockets, dramatically reducing the cost of lifting satellites into space while providing internet service to every corner of the planet with its Starlink network.
Now, Elon Musk’s privately held company is aiming for the largest initial public offering in its history as it faces multiple challenges, including landing an American on the moon, fulfilling the billionaire’s far-fetched ambitions to colonize Mars, and potentially sending an AI data center into orbit.
The company is reportedly aiming to raise more than $30 billion in an IPO, possibly late next year, that would value it at $1.5 trillion.
The funding could accelerate development of the company’s Starship deep-space probe, which is key to its Moon and Mars missions as it explores the idea of an orbiting data center, but all are met with skepticism given the need to advance cutting-edge technology.
Here’s what you need to know about Musk’s plans for the company, which maintains a large operation in the Hawthorne complex. SpaceX did not respond to an email seeking comment.
SpaceX has been private since its founding in 2002, so why go public now?
Plain and simple, the company has a voracious appetite for capital. Musk said on his social media network
How does this IPO compare to other large public offerings?
It might set a record. The largest public capital increase to date was carried out by oil giant Saudi Aramco in 2019, valuing the state-owned company at more than $1.5 trillion.
SpaceX is currently undergoing a private public offering that values the company at about $800 billion, according to a report from Bloomberg. It will provide liquidity by allowing employees to sell approximately $2 billion worth of stock. An initial public offering next year could nearly double its valuation and raise more than $30 billion, the report said. By comparison, the most valuable publicly traded company in the world is Nvidia, a maker of AI chips with a market capitalization.
What is the urgency to raise so much money?
Musk often talked about colonizing Mars during his lifetime, and now, at age 54, that may be technically impossible, but the billionaire insists otherwise. Closer to Earth, SpaceX is under pressure to prepare Starship, a giant spacecraft larger than Apollo’s Saturn V, for NASA’s Artemis mission to return Americans to the moon.
In an email to employees last week, the company’s finance chief, Brett Johnsen, said in an email to employees last week that the offering “has the potential to raise significant capital,” with proceeds potentially funding the faster development of an “insane” mission to Mars and the deployment of an AI data center, according to the Wall Street Journal.
So why put a data center in space?
Musk’s artificial intelligence company xAi and its Grok chatbot are competing with Google, Open AI and other competitors to build the most sophisticated AI agents, leading to hundreds of billions of dollars in capital investment. But what holds competitors back is the enormous power demands of the data centers that perform all the calculations.
One so-called hyperscale facility requires electricity, according to the Pew Research Center. Placing a data center in Earth orbit powered by a large solar array would give the chip 24-hour access to solar energy if the satellite is in a so-called sun-synchronous orbit.
Musk said the data center was the main reason for the IPO. He also said at a recent event held by New York investment firm Baron Capital that the country could launch data centers each year with a total power consumption of 100 gigawatts, or more than 20% of the country’s annual electricity consumption.
Is it really possible?
Experts say that’s a tall order. Astrophysicist Ehud Behar said putting the data center in a sun-synchronous orbit would provide abundant solar energy, but there were technical hurdles to overcome, such as how to cool the satellite while constantly exposing it to sunlight.
“I haven’t seen any convincing arguments or solutions for cooling data centers like this,” he said. Other drawbacks include that rapid advances in AI chips could quickly make in-orbit data centers obsolete, and that failed satellites are difficult to repair.
“I’m not convinced it’s worth it. But this is what I always maintain: When people try to do hard things, good things happen,” he said.
Are there other companies trying to do this?
yes. Redmond, Wash.-based StarCloud, backed by Andreessen Horowitz and other major venture capitalists, launched a demonstration satellite powered by Nvidia chips last month. And last month, Google announced it was considering an “interconnected network of solar-powered satellites” powered by its chips.
A Long Beach rocket startup acquired this year by former Google Chairman Eric Schmidt is also considering launching a data center in space.
But it’s not Does the Starship program face some hurdles?
yes. Starship has conducted 11 test flights so far, slowed by several failed launches, but this year has fared much better. Musk is under pressure to accelerate its development not only to realize his dream of colonizing Mars during his lifetime, but also to honor NASA’s $4 billion contract to build an upper stage version of Starship capable of landing on the moon by 2027.
But in order to transport astronauts to the moon, SpaceX will need to develop technology to refuel Starship while in Earth orbit, given the amount of fuel this massive spacecraft will consume during launch. Members of NASA’s safety committee doubted whether it could be accomplished on time.
NASA Acting Administrator Sean Duffy said in October that it would do so for competitors. Whether that actually happens is another story.
Trump, who clashed with Musk earlier this year after his brief tenure leading the Department of Government Efficiency, recently nominated Isaac Meng, a billionaire and commercial astronaut who has flown on two commercial SpaceX missions and considers Musk a friend.
