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Dreaming big: Elon Musk’s $2.5 trillion vision is about to become reality

How do you value a vision? Elon Musk, who filed the public prospectus for the initial public offering of his SpaceX overnight, values his at $US1.75 trillion ($2.45 trillion).

It takes imagination, or blind faith in Musk, to assign that magnitude of value – the IPO could capitalise SpaceX at as much as $US2 trillion – to a business that lost $US4.3 billion on revenue of $US4.7 billion in the first three months of this year alone.

The float, however, is occurring amid the frenzy surrounding artificial intelligence and the companies racing to develop it.

With ChatGPT parent OpenAI about to file a prospectus of its own, and Anthropic not far behind it, about $US200 billion could be raised, at company valuations totalling close to $US4 trillion, by three of the leading AI players before the end of this year.

Musk is leading SpaceX into the conglomerate trap

SpaceX released the much-anticipated prospectus for its initial public offering yesterday, and there are already signs the company is falling into the conglomerate trap.

Elon Musk has bucked the trend of industrial conglomerate breakups, including such illustrious companies as General Electric and Honeywell International, and decided to form a somewhat
unwieldy company that makes rockets, spacecraft, satellites, antennas, modems and now computer chips. With SpaceX’s purchase of Musk’s xAI in February, the world’s leading space company was married to an AI startup and the X social media platform.

GE decided to split up its aerospace, energy and healthcare businesses for a reason, and Honeywell is following suit by splitting off its aerospace unit, which is set to trade separately later this year. Conglomerates often tout the efficiencies of shared research or an operating model applied across businesses when, in reality, there is real danger in misallocation of resources and attention among the units. Value gets trapped as good businesses become starved of investment while struggling ones disproportionately drain resources.

Elon Musk could become world's first trillionaire as SpaceX files for largest IPO ever

SpaceX's Super Heavy booster rocket rolls past its production facility in Texas on Monday. (Reuters: Steve Nesius)

Elon Musk's space exploration company SpaceX, which also owns Starlink and xAI, has filed to go public after being valued at $US1.25 trillion ($1.75 trillion)earlier this year.

The move could make Mr Musk the world's first trillionaire, less than a year after he became the first person in the world to amass $US500 billion in wealth.

SpaceX's IPO, which is reportedly seeking to raise about $US80 billion, is set to go live as early as the middle of June once it is signed off on by the SEC.

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