By Al Root
SpaceX isn't just the world's most valuable aerospace and defense company. It's the world's most valuable telecom company, too.
Elon Musk's rocket company is planning a record-setting initial public offering of stock that could value it at $1.8 trillion, or more. SpaceX filed confidential paperwork with the Securities and Exchange Commission in late March or early April, according to reports. Some of the details of that filing have started to leak out.
SpaceX hasn't responded to multiple requests for comment about the data that have been reported.
One surprising tidbit was just how profitable SpaceX's space-based broadband product, Starlink, is. It generated Ebitda profit margins of 63% on $11.4 billion in revenue, serving some 9 million customers by year's end.
The average expected 2026 Ebitda margin for an aerospace and defense company in the S&P 500 is about 20%. The top is TransDigm, at 52%.
The better comparison might be to telecom providers. The average margin for AT&T, Verizon Communications, and T-Mobile US is 38%. T-Mobile is tops with a margin of 39%.
American Tower and Crown Castle own the physical infrastructure that lets investors make calls about SpaceX's IPO and read this on their smartphones.
Both are expected to produce SpaceX-like Ebitda margins in 2026 of about 66% to 67%.
SpaceX started out as more of a pure-play aerospace and defense company, pioneering reusable rockets to drive down the costs to reach space. Lower costs have morphed it into a telecom company delivering internet to millions, and it plans to deliver data directly to cellphones from space.
It hasn't so much disrupted the traditional aerospace players as just blown past them. Space was a smaller portion of the overall aerospace landscape until SpaceX came along. At $1.8 trillion, SpaceX would be worth more than all the aerospace and defense companies in the S&P 500 combined, by a lot. That combined number, which includes GE Aerospace, Lockheed Martin, and RTX, is below $1.5 trillion.
The threat of disruption is more real for the telecom and telecom infrastructure providers. SpaceX's constellation of more than 11,000 satellites, and growing, can handle a lot of data, potentially reducing growth for the traditional players.
The market recognizes the potential. At its current $1.3 trillion private market valuation, SpaceX is worth about two times what AT&T, Verizon, T-Mobile, American Tower, and Crown Castle are worth, combined.
Some traditional players have realized the threat. Comcast is partnering with SpaceX to fill holes in its fiber and cable networks. T-Mobile is using SpaceX to deliver some data directly to devices.
The next phase of SpaceX's transformation is AI. It wants to put AI data centers in space, developing monetizable applications for its acquired xAI. That puts it in direct competition with hyperscalers, including Microsoft, Amazon.com, Alphabet, and Meta Platforms.
Those four still have SpaceX beat on market value, worth a combined $11.7 trillion. They are expected to generate average Ebitda margins of about 57% this year. Microsoft is tops at 61%, not quite at Starlink's level.
Starlink, of course, is only part of SpaceX. xAI loses money, and the full financials aren't available yet.
It's the AI opportunity that has SpaceX set to be worth up to $2 trillion. There aren't that many $2 trillion publicly traded companies in America. There are six: Nvidia, Alphabet, Apple, Microsoft, Amazon, and Broadcom.
SpaceX could be the seventh, potentially forming a new Magnificent Seven later this year.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 27, 2026 02:00 ET (06:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments