SpaceX’s initial public offering could raise the company’s value to $1.77 trillion, make CEO Elon Musk a trillionaire — and benefit the Seattle-area space community.
The $75 billion IPO, which will list SpaceX on the Nasdaq stock exchange on Friday, is expected to be the largest initial public offering in history. It will provide additional funding to expand SpaceX’s satellite networks and launch the company’s Starship mega-rocket. Shareholders, including hundreds of SpaceX employees in the Seattle area, could get a great deal of cash.
There may also be an advantage for Pacific Northwest space companies banking on the low launch costs and high payload capacity that SpaceX promises to deliver.
“The reality is that SpaceX is the elephant in the room — and for a real reason, which is that they have very low launch costs and will continue to do so when Starship is up and running,” said Brendan Wales, general partner at Fuse, a Seattle-based venture capital firm. “So, whether SpaceX is successful or not, it has a big impact on Seattle startups.”
Those startups include several that received funding from Fuse, such as Redmond-based Starcloud, which aims to send a constellation of data center satellites into space; and Bothell-based Portal Space Systems, which is developing a manoeuvrable spacecraft designed to test, service or intercept other satellites.
Washington state’s list of space jobs doesn’t stop there: Space Northwest, a Seattle-based space industry association, says more than 75 space companies call the Evergreen State home.
SpaceX connects to the Seattle area
Even SpaceX is on the Space Northwest map, thanks to the company’s satellite manufacturing facility in Redmond. Back in 2015, Musk told a Seattle Center audience of mostly potential employees that satellite operations would be based in the Seattle area instead of Southern California because “most of you, it seems, don’t want to move to LA.”
Since then, SpaceX’s Redmond campus has been responsible for building nearly two-thirds of the world’s operational satellites in orbit, and according to SpaceX’s IPO filing, the factory continues to churn out 70 satellites a week for its Starlink broadband internet constellation. With more than 12 million subscribers, Starlink generates more than half of SpaceX’s revenue and is the only one of the company’s three business segments to make a profit.
SpaceX has not said how many of its employees work in Redmond, although informal estimates range from 800 to 2,000. It is unclear how many of these employees will cash in on stock options. Accordingly, comments posted on Reddit suggest that it won’t have enough of an impact to calm the already overheated housing market in the Seattle area. “I think it’s going to be a big notburger,” wrote one commenter.
Starlink was just the first step in Musk’s plan to transform SpaceX into a satellite and launch company. More recently, Musk has proposed sending a million satellites into orbit to process artificial intelligence data. But the IPO filing suggests Redmond won’t get a big piece of that action: Instead, SpaceX says its operation in Bastrop, Texas, will be focused on producing AI computing satellites.
Seattle-area businesses connect with SpaceX
The impact of this week’s IPO won’t be limited to SpaceX and its shareholders, said Stan Shull, who monitors the Seattle-area space industry as the founder and managing director of Alliance Velocity.
“A successful SpaceX IPO could propel the space industry forward, driving more investment in the sector,” Shull said in an email. “Also, we may see a new round of now-wealthy SpaceX employees leave and start new business ventures, including here in the greater Seattle area. Ultimately, the significant funds SpaceX is raising through this IPO will help ensure their success in developing the Starship rocket, which other space companies are trying to find their own business models for.”
For example, Marysville-based Gravitics develops orbital equivalents for aircraft carriers for clients including the US Space Force. The world’s largest cargo spacecraft is designed to ride into space on SpaceX’s Starship or other heavy-lift rockets.
“SpaceX takes you to space. Gravitics makes it easy to operate once you’re there,” Gravitics CEO Colin Doughan said in an email. “The IPO ensures that the launch layer is strong enough to build on. We’re running a transportation layer on top of it: more mass per mission, lower cost per kilogram, designed for the way commercial spaceflight is done now. We’re excited for our friends at SpaceX and we see this as good for the entire industry.”
Jason Andrews, founder and CEO of a spaceflight training business called Orbite Space, admitted that he and co-founder Nicolas Gaume were thinking about SpaceX’s Starship when they created their Seattle-based company.
“Nicolas and I really started Orbite because of the revolution that Starship represents – a huge drop in price, an increase in frequency, and an overall improvement in the client experience,” he said in an email. “As explained by SpaceX, one of their main goals is the expansion of man to the moon and eventually to Mars, which is good for the prospect of human spaceflight for a whole range of customers: governments, businesses and consumers. …
Starcloud has already struck a deal to use SpaceX’s laser-based communications system on its data center satellites, and plans to have Starship send its Starcloud-3 satellites into orbit when SpaceX is ready to take on commercial customers.
That could take a while, Shull said. “Initially, SpaceX is likely to prioritize the launch of Starship with its space business ambitions and commitments. These include next-generation Starlink missions, contracted flights for NASA’s Artemis moon program, its AI data center orbital plans, and possibly test flights to Mars,” he said. “While I think Starship can and will revolutionize the space industry, companies whose business models are heavily or completely dependent on the availability of the cheapest Starship may have to bide their time or compete for early flight opportunities.
SpaceX currently dominates the global launch industry — and if it continues to do so in the post-IPO period, Shull said the company may not see the need to cut its prices as quickly as potential customers hope. Increased competition from Seattle space startups such as Jeff Bezos’ Blue Origin space venture (for high payloads) and Stoke Space (for medium payloads) could change the equation.
The excitement generated by SpaceX’s IPO, along with low startup costs, may also spark a new wave of companies doing things that sound like science fiction today. For example, one of the startups in the latest batch of Y Combinator, Galactic Resource Utilization Space, aims to build the first hotel on the moon.
Wales, an early stage investor at Fuse, acknowledges that some of the business plans inspired by SpaceX’s IPO may not get off the ground. But the way he sees it, that’s normal.
“That kind of thing happens when you have a lot of money coming into the market, and maybe it backs off and there’s less wild stuff,” he said. “But I love these good times, because they allow creativity. Some things will survive, and there will be things that can change the world.”
