Analysis-SpaceX’s Starship test strengthens the case for an IPO, though hurdles remain
By Gianluca Lo Nostro and Akash Sriram
May 27 (Reuters) – SpaceX’s launch of an upgraded Starship on Friday brought enough progress to keep momentum strong after Elon Musk’s $1.75 trillion IPO, while warning that reusing the rocket remains a work in progress.
Starship is critical to reducing SpaceX’s launch costs, expanding its Starlink satellite business – its revenue engine – and supporting future missions such as space-based computing, the deployment of orbital AI data center satellites and a possible manned mission to Mars.
“SpaceX didn’t need to be perfect for this Starship flight. It needed proof that the developed vehicle is going the right way, and that’s what investors are looking for,” said Mark Vena, CEO of SmartTech Research.
The company has spent more than $15 billion developing what it hopes will be a reusable rocket capable of carrying much larger payloads than existing launch systems.
The 12th test flight of SpaceX’s Starship prototype since 2023, and the first of its V3 iteration, was a success by many counts on Friday. It launched a number of fake satellites and conducted a controlled launch of a spacecraft in the Indian Ocean. But it failed to gain controlled access to the Super Heavy booster, which fell into the Gulf of Mexico.
Even an incomplete test can strengthen the case for investment if it shows measurable progress toward full recycling, Vena said.
Investors, analysts and fund managers are very interested in the IPO, betting that Musk, known for turning high-risk engineering bets into leading businesses, will deliver on the ambitious promises he made in fulfilling SpaceX’s IPO.
“Full reusability is the key to unlocking very low launch costs,” said James Bruegger, chief investment officer at British investment firm Seraphim Space. “That’s where the real value lies.”
The company itself has warned that delays in development or cost targets could hinder the deployment of next-generation satellites with AI infrastructure as they increase costs, echoing complaints from several investors that Starship could be caught in a cycle of maintenance and new failures, never proving an end-to-end operation.
“What we have seen with the implementation of Starship is that it has reduced the risk of the bear case that Starship is holding on to failure. So it does not completely eliminate the risk of execution,” said Jesse Nacht, research partner at MarketVector Indexes. “Unless something is a major disaster, I don’t think it’s going to change expectations much.”
