Photograph Source: Alexander Hatley – CC BY 2.0
On Wednesday, the Washington Post ran a short piece with the headline, “Musk’s SpaceX Discloses Massive Losses Ahead of Expected Record-Breaking IPO.” The first sentence told readers:
SpaceX, the rocket company led by Elon Musk set to debut on the stock market in coming weeks, has recorded $13 billion worth of losses since the beginning of 2023, according to a financial filing made public Wednesday by the Securities and Exchange Commission.
Later in the article, we learn that the implied market capitalization, based on the SpaceX IPO, is $1 trillion. Maybe it’s old-fashioned, but when I learned economics, a stock’s price was supposed to be related to its profits. A company that loses $13 billion would not ordinarily warrant a market capitalization in the trillions.
Of course, this is the same story with Musk’s other big company, Tesla. It has a market capitalization of almost $1.6 trillion, nearly 400 times its $4 billion earnings. I suppose its stock price is a bet on Tesla’s earnings growth, but that doesn’t seem very promising with the company rapidly losing market share to Chinese competitors.
Furthermore, almost 80 percent of the earnings Tesla does have is coming from carbon credits it gets as part of what his friend Donald Trump calls “the green scam.” Tesla’s money train, even at 1/400th of its share price, may not be long-lived if Trump gets his say, so its profit growth looks to be headed in the wrong direction.
But Musk gave us a bit more guidance in the registration statement for SpaceX’s IPO. According to the WaPo article:
In its registration statement, SpaceX estimated its total addressable market — the ceiling for its business ambitions — at $28.5 trillion, an amount nearly equal to the gross domestic product of the United States.
All but $2 trillion of that opportunity comes from AI services, SpaceX’s filing said.
This means Musk is betting on getting a substantial portion of a $27 trillion annual market, 90 percent of current US GDP from his AI.
Since Musk provides no time-horizon for this projection, it’s not clear whether this is projected as an annual figure at some future point, 10, 20, or 30 years out, or perhaps even a cumulative total over this indeterminate time period. But hey, we’re just talking about a trillion-dollar stock valuation, why nickel and dime the projections?
When it comes to big boasts on future AI sales, it is probably worth noting that Musk and his Silicon Valley buddies don’t appear to be doing so well today. Chinese AI makers are beating them in sales in the rest of the world and seem to be gaining ground even in Silicon Valley.
Apparently, Airbnb is going with Chinese AI over the domestically produced stuff. The US stuff sells for five to ten times as much as what the Chinese producers charge. It’s like having the option of buying a car for $4,000 rather than $40,000. You need a pretty good story to get people to go with the $40,000 car. The market (the AI buyers’ market, not the stock market) doesn’t seem to think the Silicon Valley boys have the story.
Anyhow, it seems pretty clear that the valuation of SpaceX is really nothing more than a vote of confidence that Elon Musk will turn it into an incredibly profitable company at some time in the not-too- distant future, or at least a bet that other investors will believe that Elon Musk will turn it into an incredibly profitable company at some time in the not-too-distant future.
I have not followed Musk’s business career closely but Grok did tell me that in 2015 he promised Tesla would have full self-driving cars in two years. I did pay more attention to what Musk said about politics and government finances, especially around the time he was running DOGE. And here I can say with great confidence that Musk was not just a little bit wrong; the things he was saying were batshit crazy.
Musk repeatedly claimed that there was at least $2 trillion in waste in the federal government budget. This would put the amount of waste at more than a quarter of the budget. Since almost three-quarters of the $7 trillion budget goes to Social Security, Medicare, the military, and interest on the debt — programs Musk’s boss said he didn’t want to touch — it was pretty hard to claim there was $2 trillion in waste.
But these numbers did not stop Elon Musk. He suggested that he might give us all a $5,000 DOGE dividend check, a sum that would come to $1.3 trillion if it went to every adult in the country. Oh yeah, he also said that DOGE could balance the budget, eliminating a $1.7 trillion deficit.
Musk made other absurd claims. He said there were 20 million dead people getting Social Security checks, apparently misunderstanding the program’s procedures. Perhaps even more disturbing, even when people who understood the program explained Musk’s mistake, he never corrected himself.
Returning to SpaceX’s IPO, we’re looking at a company that loses billions of dollars. It is run entirely by a person who routinely makes promises that he can’t make good on and says things about the world that are totally crazy. That doesn’t sound like a trillion-dollar company to me, but what do I know about business?
This first appeared on Dean Baker’s Beat the Press blog.
The post Wall Street Says That a Company That Loses Billions is Worth Trillions appeared first on CounterPunch.org.
This content originally appeared on CounterPunch.org and was authored by Dean Baker.
Dean Baker | Radio Free (2026-05-26T05:53:46+00:00) Wall Street Says That a Company That Loses Billions is Worth Trillions. Retrieved from https://www.radiofree.org/2026/05/26/wall-street-says-that-a-company-that-loses-billions-is-worth-trillions/
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