SpaceX/Musk: gravity-defying fundraising would be a space oddity

Rocket science is famously exacting and social media is infamously facile. Could it be that the former is easier for Elon Musk than the latter? His $44bn Twitter takeover has been a disaster so far. It has even infected investor confidence in Tesla, contributing to a drop of nearly three-quarters in the shares of the electric vehicle company in the past 12 months.

But SpaceX, another venture of the billionaire provocateur, seems to be in better shape. The space exploration company is reportedly in talks to raise $750mn in a new round of funding that would value it at $137bn. That would represent a 10 per cent increase from the $125bn it was valued at last June. 

Valuations derived from private fund raisings tend to be misleading. Doubly so when no financing has closed. But completing an up round in a down market would reflect surging space-related spending as much as Musk’s compromised charisma. Morgan Stanley reckons expenditure could reach $1.1tn by 2040. Nasa’s budget for its Artemis moon programme alone is expected to reach $94bn.

SpaceX is well placed to benefit. The company already has contracts to handle rocket launches for the US government and makes money from Starlink, its broadband-satellite fleet. The business has partnered with T-Mobile to provide wireless phone coverage in remote areas of the US and is pitching for contracts to improve the satellite capabilities of national security agencies.

SpaceX’s relatively diversified revenue streams is one reason why its valuation has defied gravity even as those of rivals have cratered. Shares in Virgin Orbit and Rocket Lab lost 75 and 68 per cent of their value last year.

Private ownership has shielded SpaceX from the kind of valuation volatility seen at Tesla. Even so, Musk’s unpredictability and the distraction created by Twitter are a serious risk for SpaceX. The entrepreneur is the space company’s chief executive, chief technology officer and chief designer. Any new investors in SpaceX should use the Tesla stock price as a gauge of confidence in him — or the lack of it.