To justify a $1.5 trillion market cap after its IPO, SpaceX would need to earn more than Berkshire Hathaway. Here’s why that’s so unlikely

Reports are swirling that Elon Musk is planning an IPO for SpaceX this summer. Now that Musk’s merged the rocket enterprise with xAI, another pillar of his empire, he expects the combination to raise $50 billion in capital, and garner a market cap of $1.5 trillion. At those numbers, SpaceX would notch the biggest single IPO capital raise of all time, and also rank as second highest in total valuation to Saudi Aramco, and far ahead of second place Alibaba’s introduction in 2018 at $167 million.

Until SpaceX publishes its prospectus for the offering, we won’t have a detailed look at its financials. We do, however, have important snippets of information. Musk’s stated that SpaceX generated some $15 billion revenues last year, and it’s been widely reported that it booked roughly $8 billion in EBITDA. The scenario circulating widely in the media, and not refuted by Musk, shows a loss of $2.4 billion for the first 9 months of 2025.

These numbers don’t include interest and depreciation, the latter SpaceX’s outlays for plant and equipment. Knitting this limited view of the now-united businesses, it appears likely that the current SpaceX is showing zero or even negative GAAP earnings.

The epic valuation may doom SpaceX stock by setting the bar too high

Hence, SpaceX can’t be valued on its current profits, but only on its prospects from gigantic growth in the most pioneering of industries whose future trajectory is also unknowable. However, we do know two things about SpaceX that should give investors big worries about a $1.5 trillion valuation.

The first: These are the ultimate in capital intensive enterprises. Musk announced SpaceX’s intention to build 10,000 fully reusable Starlink rockets, each over 400 feet tall. At a cost that Payload Research estimates at $35 million each, that’s $350 billion in cash for the like of krypton-gas burners, solar arrays, and stainless steel alloy. xAI is a major builder of high-cost data centers than run such products as its GROK chatbot. In 2025, it reportedly burned $8 billion in cash, primarily to fund such behemoths at $20 billion “MACROHARDRR” facility in Mississippi. The upshot: These aren’t low investment software plays that if successful, could easily post 35% net GAAP margins. In general, it’s extremely rare for “manufacturers,” whether it’s in aircraft or data-generators, to achieve such loft levels of profitability.

The second “known” is the earnings SpaceX must produce to reward shareholders going forward. Keep in mind, it’s beginning at a standing start, given its apparent lack of current earnings. Where does SpaceX need to be in five years? This is the riskiest of bets. Looking at what investors demand from similarly risky enterprises, let’s estimate shareholders will want total returns of at least 10% a year to hold the stock. Hence, by 2031, its market cap must grow to at least $2.4 trillion to ring the bell. That’s bigger than all but four of the world’s companies, Nvidia, Microsoft, Alphabet, and Apple are today, far larger than Meta Platforms and Saudi Aramco, and $1.2 trillion bigger than Musk’s flagship Tesla.

We’ll assume it will then merit a price-to-earnings multiple of 30, the median for the Mag 7. At our $2.4 trillion cap, the bogey for GAAP net earnings towers at $80 billion a year. That’s 33% more than Meta, 21% above Berkshire Hathaway, and about two-thirds the numbers for Alphabet and Apple.

“Whether SpaceX can get there is really a moonshot,” says Jack Ciesielski, one of America’s leading accounting experts. “It’s anybody’s guess how big the space industry will become in the future.” SpaceX could get there. But it would need two things: An extremely fast-growing market, and signficant monopoly power. It already faces a number of smaller competitors, including Jeff Bezos’s Blue Owl. SpaceX’s best chance is developing a huge lead that gives it economies of scale in rocket production that no competitor can match.

The chances of that happening are highly uncertain, while the gigantic price you’ll pay as a shareholder to ride the rocket, and hope it soars not sputters, is pre-set. According to media accounts, SpaceX is planning its own stock market launch to coincide with a rare planetary event where Jupiter and Venus appear close together in the sky. The best bet is that SpaceX proves a scientific triumph, and star-crossed as an stock.

This story was originally featured on Fortune.com