On Sept. 28, 2008, SpaceX became the first private company to launch its own spacecraft into orbit. Ever since that date, investors have had just one thought on their mind: When will SpaceX go public, so that I can buy a piece of this business?

Over 14 years after SpaceX's maiden voyage, I fear the answer has become clear: SpaceX won't IPO anytime soon.

Indeed, SpaceX may never IPO at all.

Falcon 9 rocket launch with SpaceX hangar in the foreground.

Image source: SpaceX.

23 billion steps forward, 10 billion steps back

That's a crying shame, because if SpaceX were to go public, it would surely be a big deal.

SpaceX has come a long way since announcing plans to supplement its rocket-launching business with a satellite internet service seven years ago. When that happened, it inspired both Fidelity and Alphabet to plunk down investments in SpaceX, and gave the space company its first $10 billion valuation.

In the years since, SpaceX's valuation has grown by leaps and bounds, topping $100 billion in 2021, hitting $127 billion in July 2022, and setting the company on course for a $150 billion valuation in its latest funding round. By December 2022, however, demand for SpaceX shares had softened, and the company ratcheted back expectations to a $140 billion valuation -- $10 billion less than it had hoped for.  

Elon Musk's incredible shrinking empire

That valuation backtrack is bad news for SpaceX (and Elon Musk) for two reasons. First, because it suggests SpaceX shares are no longer the hot commodity that they once were. After growing in price 10x in its first six years, SpaceX's next funding round promises a growth rate of perhaps just 20% annualized.

And here's the other reason a $140 billion valuation is disturbing: It means SpaceX must sell relatively more shares to raise a given amount of cash than it would need to sell if its shares were worth more. Thus Musk, SpaceX's founder and CEO, is losing control of his company at perhaps a faster rate than he had hoped.

Consider a recent Wall Street Journal piece that pointed out that after several rounds of selling stock to raise cash, Musk's ownership interest in SpaceX has shrunk from a 54% majority interest (shortly after announcing Starlink) to a now-minority interest of just 42%.  

Owning isn't the same thing as voting

Granted, Musk has structured SpaceX's capital such that the CEO retains a 78% voting interest in SpaceX, and thus majority voting control of the enterprise. But with every share SpaceX sells, Musk's control slips a little bit more.

A big event like an IPO of the company could accelerate this process. With Musk's SpaceX stake now well below a majority, he may not want to take that risk.

Starlink offers hope

Of course, SpaceX still needs cash. If it can't (or won't) go public to raise that cash, then how is SpaceX to get ahold of it? Well, one option might be to IPO only a subsidiary of SpaceX -- Starlink -- rather than taking SpaceX itself public.

Recent news on Starlink's progress suggests this may be the direction Musk is leaning toward. On Dec. 19, SpaceX tweeted that its Starlink satellite broadband internet service had just hit 1 million active subscribers -- double its subscriber total at the time of the last update in June.

When you consider that Musk has promised to IPO Starlink only after the subsidiary's revenue is "reasonably predictable," Starlink's subscriber growth suggests that day may be approaching -- except for one thing.

Starlink's subscriber growth is impressive. One million subscribers paying $110 a month for satellite internet service means we can "reasonably predict" that Starlink is pulling down in excess of $1.3 billion in annual revenue. But as recently as October, Musk warned that Starlink is still losing money despite all the subscribers -- and despite all the revenue.

Curb your enthusiasm

Now consider: According to internal documents uncovered by The Wall Street Journal in 2015, SpaceX has long counted on Starlink to produce the bulk of its profits. If things went according to plan, Starlink would have generated approximately $7.5 billion in operating profit for SpaceX in 2022. Were that the case, both Starlink -- and SpaceX itself -- would be in a position where they could expect any IPO announcement to be successful, generating significant cash with minimal dilution.  

Instead, Starlink is losing money today. Things are not going according to plan -- for Starlink or for SpaceX. This could be one reason why investors are hesitant to give SpaceX a higher valuation. It could also be a factor delaying the hoped-for IPO of Starlink.

Combined with SpaceX's other issues -- Musk's tenuous control and SpaceX's own weakening valuation -- I'd say the prospects for an IPO look pretty dim today.