Opinion

David Stevenson

December 26, 2025 — 1:00pm

Elon Musk fans might soon have a new stock to fixate on: SpaceX.

Over the past few weeks, news has been filtering out that Musk’s company might be about to launch a spectacular listing on the stock market.

This image from a SpaceX livestream in August shows the 10th Starship mission splashing down in the Indian Ocean.AP

Executives are reported to be selecting investment banks to run the initial public offering, which could be worth $US1.5 trillion ($2.2 trillion). Not bad given SpaceX is expected to make $US25 billion of revenue next year.

According to analysts’ estimates, SpaceX revenues are due to hit $US48 billion by 2030 with net earnings of about $US10 billion.

It’s also an impressive valuation, given that the business was valued at just $US350 billion this time last year. Then again, with its Starlink business selling broadband packages at $99 a month, I reckon these revenue forecasts might be conservative.

If a stock market listing does happen, it will be a win for British fund manager Baillie Gifford, which has consistently backed Musk.

Its public funds are heavily invested in SpaceX. Shares in Musk’s company represent around 15 per cent of the portfolio of Scottish Mortgage (where I own shares), 14 per cent of the Schiehallion fund and about 16 per cent of Edinburgh Worldwide Investment Trust.

So, why the $US1.5 trillion valuation? What’s got investors so excited is that SpaceX is in the vanguard of three fundamental shifts in space technology, or spacetech.

The first is its reusable rockets. Private companies have long been involved in space, but usually via long-term state contracts. SpaceX has fundamentally changed that model.

Now anyone, not just governments, can hire a rocket to send something into the atmosphere.

The second, and related, key change is that SpaceX has lowered the cost of space launch, which allows a quantum increase in the number of launches.

That brings down the cost of doing stuff in space; be that monitoring the earth, providing connectivity via broadband or even building semiconductor fabs in space.

The third more recent change is that many space tech businesses have pivoted to defence applications. The war in Ukraine is just one example.

According to the Space Foundation, the global space economy has experienced strong growth over the past two decades, reaching $US613 billion last year.

Before we get too carried away, it’s best to have a reality check or two. Spacetech businesses have been listed on markets for some time, and they have not always been as exciting as SpaceX.

Investors might remember Inmarsat, which had a turbulent time on the British market and was delisted in December 2019 after being taken over by private equity.

It’s also true that many current spacetech firms listed on the sharemarket are highly valued and not exceptionally profitable.

Take Italian firm Avio, which, as one of Europe’s few launch providers, is central to Europe’s growing space defence needs. It boasts a big order book and shares that have nearly tripled in value over the past year – but the business makes only minimal profits.

It’s a similar story in the US, where another fascinating business is Planet Labs, which operates the world’s largest fleet of earth observation satellites.

Planet Labs now operates over 450 small satellites, capturing medium-resolution images that are processed and delivered through its cloud-based analytics platform. The shares trade at $US18 and its market cap is $US5.7 billion but the firm has only just broken even and has revenue of about $US300 million per annum.

Stepping back from these examples, analysts at Panmure Liberum say listed equities in this sector have rallied by 135 per cent since a valuation trough in July 2024, while private markets had inflows of $US33 billion in 2024 and $US37 billion so far in 2025.

There’s even a space ETF listed on the London market: the VanEck Space Innovators ETF, ticker JEDI (yes, really), which has risen in value by 63 per cent through to the end of November.

Its top holdings include AST SpaceMobile, Globalstar, Viasat and Rocket Lab.

Investors interested in this space could also look to more conventional defence tech firms such as Safran, which has a big space business and is solidly profitable.

In Britain, I’d also highlight two firms: Filtronic and Cohort, both of which trade at earth-bound valuations.

Investment banks are running the numbers on an initial public offering of SpaceX which could be worth $US1.5 trillion.AP

I’m particularly keen on the first company, Filtronic, which is deeply involved with the space sector and manufactures high-frequency, high-reliability RF transmit and receive solutions.

It produces an eye-watering return on capital employed. Still, most analysts expect a significant profit decline next year, which makes the stock much more expensive.

That said, its links to SpaceX are deep and wide: in August, the firm received an order worth £47 million ($94 million) for its gallium Nitride product from SpaceX.

It’s just won another decent-sized defence contract for about £11 million and my money would be on a big US firm taking over Filtronic, confirming a long-term trend of great British tech being sold to US companies.

Another firm to watch carefully is Cohort, a naval defence specialist, which, through its EM Solutions, is pushing aggressively into space tech.

I’ll finish with what I think is the cheapest way into the space tech sector: British investment trust Seraphim Space Investment Trust, in which I own shares ... and I have been buying more.

This roughly £200 million venture capital fund invests in earlier-stage space tech firms and trades at a 21 per cent discount to its portfolio value, even though many of its companies are outperforming.

Many of the firms in the portfolio are pivoting to defence applications and the fund has built a solid track record, but I think its shares are profoundly undervalued.

The Telegraph, London

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion.Sign up to get it every weekday morning.

Most Viewed in Business

From our partners