SpaceX Thinks This "Early Stage" Business Is Critical to Its $1.77 Trillion IPO Valuation
Written by Ryan Vanzo for The Motley Fool -> SpaceX claims a total addressable market of $28.5 trillion. Nearly all of this growth potential is tied up in a single unprofitable division. With the SpaceX initial public offering (IPO) just days away, it's critical for every pote
Nearly all of this growth potential is tied up in a single unprofitable division.
With the SpaceX initial public offering (IPO) just days away, it's critical for every potential investor to review the company's IPO prospectus . In this 370 page report, a few critical details are revealed. Arguably, the most important figures to understand are SpaceX's claimed total addressable market, or TAM.
"We believe we have identified the largest TAM in human history," the company brags. "We estimate that our quantifiable TAM is $28.5 trillion."
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Perhaps surprisingly, only 1% of this total addressable market deals with rocket launches -- a business segment that SpaceX forecasts only has $370 billion in potential runway. Less than 6% of SpaceX's total addressable market, meanwhile, deals with its Starlink internet service -- currently, its sole profitable business.
Instead, a whopping $26.5 trillion of SpaceX's total $28.5 trillion claimed TAM deals with a single business segment that even the company admits is still "relatively early stage."
SpaceX CEO Elon Musk has a penchant for forming conglomerates. That is, his businesses often serve a wide variety of end markets. Tesla (NASDAQ: TSLA) , for example, is best known as an electric vehicle (EV) stock. But the company has invested billions of dollars into other initiatives, everything from artificial intelligence (AI) to utility-scale battery packs. Based on Tesla's $1.2 trillion market cap, it's safe to say it is valued based on these unprofitable ventures than its current automaking business .
SpaceX is no different. The company has a broad portfolio of interests, all of which have strong synergies but are not always completely interconnected. For example, the company is the world's largest rocket company. But it also operates the largest low-earth-orbit satellite network, with dreams of establishing a permanent human base on the moon, orbital data centers, vertically integrated semiconductor manufacturing facilities on the ground, and much more.
