SpaceX IPO: Ron Baron Wants $1BN. Buy or Bubble?

Added: 2026-05-23

[00:00:00]Elon Musk's space exploration technologies or SpaceX is set to IPO in the coming weeks for around a $2 trillion valuation. One early investor, Ron Baron, is excited to invest another $1 billion into SpaceX because he believes that this is a great opportunity to invest in SpaceX as he believes the company could be a 10, 20, 30 trillion dollar business in the years ahead. His investment vehicle, Baron Capital, already holds $15 billion in SpaceX stock, the fund's largest holding. And so in this video, I wanted to walk through how to think about valuing SpaceX so that way you can make your own decisions at the time that they go public in the weeks ahead. My name is Daniel, you're watching Unrivaled Investing. Let's go through what is going on with SpaceX because a lot of people think it's just a space launching business. The reality, there's a lot more. You have the launch segment, you have connectivity, and you have AI infrastructure that includes Twitter, XAI which powers Grok, and a new AI infrastructure bet. And so when you're looking at the different segments now, it's interesting that Starlink connectivity, so satellites providing internet connectivity, mobile connectivity, is actually the key source of revenue and profitability for SpaceX with 10.3 million subscribers across 164 countries, 11.4 billion in revenue up 50% year-over-year, and very lucrative, very high profit margins, around $4 billion in operating income in 2025, $7 billion in EBITDA. This is a very compelling financial setup, especially when you think about global coverage, high performance, you know, everywhere access. Folks are, you know, you even have someone like Mr. Beast talk about how he only wants to fly on planes that now have SpaceX connectivity because of the fast download speeds and just the seamless experience that you can have.

[00:02:11]The launch business, which is what they were really famous for, is much smaller, around $4 billion in revenue, much lower profitability, only $600 million in EBITDA. They've done hundreds of launches, most of which from the Falcon 9 rockets. And that the Falcon 9 has a 99% plus mission success rate. Now, the reason why the launch business is important, even if it's less profitable and a lower revenue driver, is because it reflects that SpaceX owns the railroad to orbit. So, it's not just about selling launches to NASA or third-parties, it's that SpaceX owns the route to orbit, so then they can, hmm, reinvest and take some of that capacity for their own downstream initiatives.

[00:02:57]One of the key valuation unlocks expected in the weeks and months ahead is with Starship V3, which is expected to be fully reusable, one of the world's largest rockets ever, being able to carry 100 metric tons to orbit. This is This capacity, 100 metric tons, is what is going to be the unlocking vehicle for, let's say, lunar operations, Mars ambitions, potential Mars colony, as well as orbital AI compute, direct-to-sell, you know, connectivity, and the V3 Starlink satellites, which I will talk about in just a second. So, Starship V3, this is the critical unlock expected in the second half of this year.

[00:03:41]And the reason why it's so important is because it enables the Starlink satellites, the third version, V3, which is a major jump in deployed capacity with 1 terabyte per second speeds down link down link speeds and this one Starship the the V3 version will be able to carry up to 60 of the V3 satellites per Starship launch. That's roughly 20 times the down link capacity deployed versus the current Falcon 9. So you can have a huge capacity increase in terms of global internet coverage. This is tapping into what management believes is a 1.6 trillion dollar connectivity opportunity. Think about rural homes with poor internet choices. Think about rugged areas where maybe you're deep in the ocean. It's tough to get a connection or maybe you just want to have mobile connectivity anywhere in the world. Management believes these combined both the broadband and mobile opportunities are combined a 1.6 trillion dollar opportunity and not only looking at broadband connections and mobile connections, but also think about smart devices. You may want to be able to connect internet to really anything in the world in any location around the world.

[00:05:01]And management's view is that as they're able to dramatically increase their capacity their internet coverage around the world, their revenues also going to follow in a jump and we've seen it so far 20 25 50% growth. There is the real possibility if you have these super fast download speeds that this could be a 50 to 100 billion dollar business in the future and I'd argue this is currently the bulk of where you're thinking about the value for SpaceX currently because this segment has such high margins that you know, I already called out 4 billion dollars in operating profits on 11 billion dollars in sales. This segment could arguably you know, if you get to the 50 to 100 billion dollars in sales, this could be you know, at 100 billion dollars in this could easily be $50 billion in operating profits based on the satellite network, the satellite infrastructure they invest in. So, the question is no longer whether Starlink can grow, in my opinion, but how large the connectivity business can become as they follow these steps of launching Starship V3 and then Starlink V3.

[00:06:08]So, you might think Starlink is huge.

[00:06:11]Talk about $1.6 trillion opportunity. But, the reality is management believes that the AI opportunity could be enormous, around $26.5 trillion. You're talking about the economy of countries, multiple countries. The total addressable market, when you're looking across SpaceX's different segments, management believes is around $29 trillion.

[00:06:34]worth massive, and the two biggest parts, this includes the Twitter operations, xAI for Grok, the two key parts are AI infrastructure and enterprise applications. With AI infrastructure, management estimates this is a $2.4 trillion addressable market. It's two stages. The first stage is terrestrial AI compute, about building massive AI data centers. Now, they have Colossus and Colossus 2, where they which they've been able to put up in record time. This collectively is around 1 gigawatt of compute power.

[00:07:06]However, in the years ahead, possibly as early as 2028, management hopes to use this vertical infrastructure, Starship, Starlink, and satellite manufacturing to be able to launch AI compute in space that will leverage solar energy and the space environment for cooling. So, if you're upset about potentially having a data center in your backyard, don't worry about it because Elon Musk is just going to put it in the sky. And so, the strategy starts on Earth, but the longer-term vision is AI infrastructure in orbit. And interestingly enough, management just signed a record deal with one of the Frontier AI labs, Anthropic, to leverage their excess capacity using Colossus and Colossus 2, their existing data centers. The deal is for over 1.2 billion dollars in revenue per month. So, their historic financial showing Twitter and their revenue from Grok and paid memberships around 3.2 trillion dollars, this is really meaning, you know, it's it's immaterial relative to the just this new deal that they signed with Anthropic, which alone is around 15 billion dollars.

[00:08:15]So, one should expect a step change result in their AI segment, and this is just one deal. They might have many more in the years ahead. Long-term management hopes to launch 100 gigawatts per year of annual capacity, just a huge jump.

[00:08:32]Keep in mind, they're currently at 1 gigawatt.

[00:08:35]Goal is 100 gigawatts per year.

[00:08:38]With this potential launch, their expectation is that that would be around 20% or roughly 1/5 of total annual US power production. Think about what they could do, you know, in terms of this, you know, solar-powered orbital data centers. And longer term, you know, even if they're not able to get to 100 gigawatts, and they're only able to get to 10 gigawatts, they still view this as very economically attractive because they own the full the full shop, from the rocket launch to manufacturing the satellite to to putting up the data center.

[00:09:16]And maybe someday they'll have the chips, too. And so then next up is looking at the enterprise applications, which management views as an even larger opportunity, around 23 trillion dollars addressable market. And management, you know, points at all the initiatives they've had with AI so far. In 6 months, they were able to launch Grok Voice.

[00:09:37]They now have 10 billion images per month, 2 billion videos per month, and AI generation. Then they're looking to build macro hard, that's a play on Microsoft, which is a series of AI agents to really enable, empower users to emulate digital workflows. The idea here is that enterprise applications will not be about software as a service, but more like taking a slice of global labor and corporate operating costs.

[00:10:06]It's about being able to have AI run businesses, run whole segments for you.

[00:10:10]It's starting in highly productive areas like coding and software, but over time it's going to get more and more evolved, more and more sophisticated, management decision-making, and ultimately running the businesses for individuals. So that's the goal with macro hard, with what they're building. So then the question is, well, how should you value SpaceX? The IPO's expected later this year, in June. The ticker's expected to be SPCE.

[00:10:35]The proceeds, it's expected to be the largest IPO ever, around 75 billion dollars in proceeds. And then the valuation, as I already mentioned, around 2 trillion dollars. Do you agree with, you know, Baron Capital, Ron Baron suggesting that this could be a 10, 20, 30 trillion dollar company in the years ahead? I'm going to share my thoughts in just a second. First of all, recognize none of this is financial advice. Also, Josh Josh Joseph P. wrote, "I recently subscribed to your site and love it."

[00:11:04]This follows Sam, who wrote, "Daniel just re-upped my annual subscription after 1 year of being in the community.

[00:11:10]The subscription has paid for itself many times over." If you're looking for compelling ideas, where I call out, you know, what I own, what I'm buying and selling in near real time, you can see that at unrivaledinvesting.com.

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[00:11:43]And by the way, just for the remainder of this month, I will be offering, because this is a, you know, an episode focusing on how to think about how to read the financial statements of a company, I am offering this financial statement course, financial statement analysis course, completely as a complimentary gift for any new subscriber to Unrivaled Investing for the remainder of this month. So, just uh shoot me an email after you sign up, and I'll make sure you get this course for free when you sign up. Also, I'm also the co-founder of Flash, which is an AI tool aimed at empowering investors around the world with research reports leveraging AI to be able to analyze any company in the world and get a podcast, a deep research report. Now, one of the premium features we recently launched is Insider IQ, and with it, we've included congressional trades. So, if you want to follow along with what are the senators and congressmen doing, you can see, for example, recently one congresswoman was, you know, dumping over a million dollars of Qualcomm stock. So, if you want to follow along that information, maybe explore why, you can check that out at flash. See the link below. Looking at SpaceX, it's important to recognize the mission. Management calls out the mission is to build the systems and technologies necessary to make life multi-planetary, to understand the true nature of the universe, and to extend the light of consciousness to the stars.

[00:13:08]The reason why understanding and reading this mission statement is so important is because it's sort of like, you know, Warren Buffett actually talked about this previously, it's sort of like going to a restaurant. If you see an Italian restaurant, you're not expecting to get sushi when you go in there.

[00:13:24]At least you'd certainly be disappointed if that's what you get. With a company like SpaceX, they're making the case, "Look, we are not focused on the free cash flow per share, you know, what we're growing in the next year or two.

[00:13:35]That's not the mission." And some companies make it very clear, "Our mission is to grow free cash flow per share, delight our customers. That's it." This is very, very different. So, this should attract a different type of shareholder base. So, it is important to recognize that. You may have a premium, possibly a discount, due to that.

[00:13:52]Historically, there has been a sizable Musk premium of these lofty ambitions.

[00:13:57]And I personally I like that mission as well. Now, that doesn't necessarily mean that I'm going to invest alongside of it, because when I invest, I like to have very clear, "Hey, what's your free cash flow per share ambitions over time?" Looking at the financials, it is important to recognize right now SpaceX is hugely cash burning. That's part of the reason why they're doing this IPO, raising tens of billions of dollars to finance their costs. Because you look at their space segment, and yes, it generated around $4.7 billion in revenue, but they're also investing billions of dollars into the capital expenditures, the equipment for this business. So, this is a cash burning segment. Their AI segment is hugely cash burning. Across the company, they're spending tens of billions of dollars, burning tens of billions of dollars. The only segment that is currently profitable, cash flow positive, is their connectivity. So, that is why it is so important that you have these steps of launching Starship V3, launching Starlink V3, getting these high download speeds around the world, so that way you could scale up connectivity, have this super high margin business that can finance these two segments, the AI and space segments, particularly AI, especially because management is saying, "Look at this opportunity in the years ahead." So, it is important to recognize this dynamic as you're thinking about the business. And when we think about the valuation, think about the rumored $2 trillion valuation. Looking at these historic results in 2025, we know, just looking at the historic results, it's sort of like driving a car in the rearview mirror. In this case, it's like driving a super fast driving car in the rearview mirror. That's not going to drive impact where you are, you know, in a in 60 seconds. You might be way down the road.

[00:15:44]You know, you see the Anthropic deal that I called out. That's a step change in AI revenue. So, it is important to recognize historic results, looking at their current results even, only justify so much. And I would say looking at the connectivity and their data AI segment, I would say they're probably around, just based on their current fundamentals, around 100 to 200 billion dollars in fundamental value that you could attribute to the financials that I was just talking about. Because just think about it, for example, if you say connectivity is $4 billion in annual profit, let's say round up to $5 billion, and you slap on a, you know, an attractive super high multiple like 40 times, that's how you're able to get to something like 200, you know, that's how you're able to get to these much larger valuation. But it's not anywhere near the $2 trillion that's expected valuation for the IPO.

[00:16:38]And so, I think it is important to recognize a huge part of SpaceX's valuation is about the future potential.

[00:16:45]Starlink scaling, Starship working later this year, AI compute exploding as they launch new data centers, potential orbital data centers, getting Grok to be better as they add more data and more compute power, having a low-cost access, you know, near monopoly-like position. That, I'd argue, that's part of the existing $200 billion value. The $2 trillion value, getting from 200 from the existing operations, this is my own sort of ballpark, to the two trillion, that's going to require the believers that sign up for the mission, and that's going to require continued execution. And getting from the two trillion to the 30 trillion that Ron Baron's talking about, I think that's going to be years and years of scaling up their global internet, you know, connectivity. If you are the global internet provider and everyone just goes to you because it's convenient, whether or not it's your phone or your your home, you could have managed imagine that doing hundreds of billions of dollars in profit, let's say in in the decades ahead. So, we will see. They won't be alone though. Of ultimately, Amazon's going to try to compete with them and you know, they have their own initiatives. And I think it is also important to recognize, you know, as you're looking at these different pieces, that this is all part of, you know, a chessboard that Elon Musk is looking at. And he might say, "Look, I have the brains with AI. I might be able to beat everyone else out by launching, you know, AI with so much compute, by owning this full stack and getting into space and be able to build these data centers, I'll be able to leapfrog ahead of everyone.

[00:18:20]But I also need the physical, you know, in the physical hardware as well. And that's where Tesla comes in with the autonomous robots, autonomous driving.

[00:18:29]So, I do suspect personally that he's going to use SpaceX as a rich currency, an expensive currency to issue stock and buy Tesla outright in, let's say, the next year or two. That would be my expectation, at least thinking about, you know, all the different pieces on the board. So, this is a very exciting development. I'd love to hear your thoughts if you're a buyer with, you know, Ron Baron who's looking to deploy a billion dollars in the SpaceX IPO.

[00:18:59]Personally, I don't think I'm going to be pulling the trigger. I like stories where it's more focused on the, "Hey, how does the current price compare to the existing financials?" And then you just get the future potential completely as the whipped cream and cherry on top for free. But look, every investor is going to be different. I'd love to hear your thoughts in the comments below. If you enjoyed this video talk about SpaceX, please make a point of hitting that thumbs up, hit that subscribe button, and thanks so much for watching Unrivaled Investing.