SpaceX is about to go public. Here’s how it makes money
SpaceX is about to begin trading on June 12 and it aims to go public at an unprecedented $1.8 trillion valuation.
Elon Musk is a controversial figure. That said, anything he’s involved with tends to attract a lot of hype.
Over the past few weeks, we’ve received a fair share of questions about SpaceX. That’s why we’re tackling the subject with a three-part series covering SpaceX’s IPO through the lens of Uniform Accounting.
We’re kicking off the series with a detailed look at SpaceX’s three segments.
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Elon Musk’s SpaceX is set to begin trading on June 12.
The company has already published its investment prospectus. And it aims to go public at an unprecedented $1.8 trillion valuation.
While Musk is a controversial figure, there tends to be a lot of hype surrounding anything he’s involved with. The SpaceX initial public offering (“IPO”) is no exception.
We’ve received a fair share of subscriber questions about SpaceX over the past few weeks.
That’s why we’re tackling the subject with a three-part series covering SpaceX and its looming IPO through the lens of Uniform Accounting.
For today, we’re starting off with a detailed look at SpaceX’s three segments, what each business does, and how profitable they are.
SpaceX’s “space” segment launches objects into space. Musk personally created this legacy business back in 2002. So it has been running for more than two decades. Today, it boasts revenue of about $4 billion.
SpaceX, apart from conducting satellite test launches, plays an important role in helping other organizations launch into space.
Last year, SpaceX facilitated 11 of the 12 medium and heavy launches on behalf of the National Security Space Launch (part of the U.S. Space Force). And it provided the launch site and services for all five of NASA’s trips to the International Space Station.
The space business is essentially a toll operator for getting things and people into orbit. It’s the dominant player in this market. SpaceX was responsible for more than 80% of all U.S. launches in 2025.
As the market leader, SpaceX has turned its space segment into a decent business.
For most businesses, a 5% Uniform return on assets (“ROA”) is their breakeven level. And the corporate average across the entire market is 12%. But for this article’s purposes, we’re breaking down Uniform ROA even more, looking at each of SpaceX’s individual business units.
The space segment generated abysmal 1% returns in 2023. So it wasn’t profitable. But that number rose to 12% in 2025. And as it handles more launches every year, our models project profitability reaching 17% this year.
The Space segment is steady and should be able to earn a decent profit. However, the narrative about SpaceX’s other segments isn’t quite as straightforward.
Earlier this year, xAI was folded into SpaceX through an acquisition.
Musk launched xAI in 2023 to compete with AI model developers like OpenAI and Google parent Alphabet (GOOGL). It owns Musk’s competing AI model, Grok. It also owns the social media network X (formerly Twitter), which Musk bought in 2022.
But mostly, the AI business consists of two massive AI data centers called Colossus and Colossus II.
Unfortunately, this business is a money pit while the social media landscape has been challenging.
Several advertisers pulled out after Musk bought the platform. And Grok hasn’t caught on the way Musk hoped. As of the end of 2025, it had just a 3% market share for all AI models.
This segment only generated $3.2 billion in revenue last year. And new data centers don’t come cheap.
No wonder its Uniform ROA has been deeply negative for three years running. Its “best” year was 2024, at negative 9%. Last year, returns fell to negative 18%.
To claw its way out of the red, the AI segment is renting out space at its data centers. It signed a deal leasing space to competitor Anthropic for $1.25 billion per month, translating to $15 billion annually.
That cash is expected to help improve returns to a “mere” 5% loss by 2027.
AI is SpaceX’s biggest question mark. It’s trying to compete with the biggest players on several fronts. Until something changes, we can expect it to stay unprofitable for at least a few years.
Then there’s Starlink, the company’s cash cow segment.
Starlink has roughly 10,000 active satellites. Through that network, it offers satellite-based broadband and cellular subscriptions in 164 countries.
It has amassed over 10 million customers already. It also brings in more revenue than the other two segments combined, at $11.4 billion.
Connectivity has high “operating leverage.” Once it launches satellites into space, it doesn’t have to spend much more to add each new customer. And the more customers the business has, the more profitable this segment will become.
Starlink brought in less than $4 billion in revenue in 2023. Returns were already a respectable 15%. And they doubled to 30% last year. On its current trajectory, profitability could reach 61% by 2027.
This is SpaceX’s most profitable segment by far.
Musk has high ambitions for SpaceX. He expects the company to go public at a $1.8 trillion valuation. That would be the highest-valued public offering of all time.
It’s hard to evaluate that number without understanding each segment. That alone isn’t enough either.
Tomorrow., we’ll take a look at what each segment is worth based on how it’s doing today and how it should do in the next few years.
Best regards,
Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research
at Valens Research