SpaceX IPO: Elon Musk’s Next Move Could Shock You

SpaceX IPOSpaceX Corporation Fires Up Mars Rocket. Is a SpaceX IPO Coming?

SpaceX has tested its “Raptor” rocket engine for the first time. This is none other than the rocket engine that the company expects to use for the spacecraft that humans will use to reach Mars in 2024. The test was successful.

In order to reach another planet, you must have some powerful thrusters. SpaceX and NASA are well aware of the distance—and difficulty—that separates Earth from Mars. Now that the Mars rocket has started up, does it mean it’s the right time then for a SpaceX initial public offering (IPO)?

The best way to make it easier to reach Mars is to reduce the distance as much as possible, taking advantage of a window of opportunity in which the distance between Earth and Mars will be minimal. By the way, even at its shortest distance, the journey will still be rather lengthy at over 30 million miles. That distance alone is a hint as to the chances of a SpaceX IPO.

A SpaceX IPO Would Help Raise Capital But…

Although more investment is welcome—and the capital markets would be the ideal place to find it—there is too much risk. A SpaceX IPO would imply offering the kind of assurances to investors that nobody can provide. SpaceX can pursue all of its plans, even managing to launch the rocket, but any failure—especially with humans on board—would be magnified if SpaceX stock were to be traded in the capital markets.

SpaceX will certainly attract interest from investors—the big kind—and government funds. The Raptor engine startup test at the SpaceX facility in McGregor, Texas will be followed on Tuesday by Elon Musk’s much-awaited speech on how to establish a city on Mars. Indeed, Musk will be speaking about a topic, which until not long ago, was strictly in the realm of science fiction.

Some people continue to believe that cities on Mars should remain exclusive to science fiction. As exciting as it might be, the idea of humans landing on Mars in less than a decade is difficult enough to absorb. The notion of building a city there; well, we’re stretching the limits of credibility. We’re entering “Disney” territory here. A SpaceX IPO would mean investors betting on humans landing and building a city on Mars. This would require investors having more faith in Musk than the Pope has in God.

What Will Elon Musk’s Big Announcement be?

Many hope to hear Elon Musk discuss the prospects of a SpaceX IPO. But, as noted before, this is unlikely. Rather, Musk will talk about Mars colonization—within a decade no less—in a talk on September 27 at the International Astronautical Congress in Guadalajara, Mexico. Musk will likely introduce his “Mars Colonial Transporter.” Indeed, this is none other than a spaceship, which the SpaceX CEO says, “could deliver 100 people to the planet Mars.” (Source: “Musk’s SpaceX successfully tests rocket engine that could help us colonize Mars,” CNBC, September 26, 2016.)

SpaceX, still a private company, and the object of much IPO speculation, recently suffered a major setback as a rocket exploded at Cape Canaveral just weeks ago. Now it has bounced back almost as if that had never happened, switching its focus on Mars. The official web site, should you check it, mentions nothing about the test. As usual, Elon Musk tweeted the announcement from his personal account: a short and concise statement with few words and an image, that of a wave energy emitted by the “Raptor engine for interplanetary transport.”

Elon Musk announced the Raptor engine as early as October 2012, officially declaring that the new engine would be several times more powerful than the first-generation “Merlin,” indeed, in one of his tweets following the announcement of the test.

Instead of using kerosene and liquid hydrogen as the propellant mix, the new engine is based on a mixture of liquid methane and liquid hydrogen. The Raptor, says SpaceX, should be powerful enough to allow for a full exploration of Mars. Elon Musk expects this rocket to power the first human settlers to Mars. SpaceX funded the Raptor engine by itself.

SpaceX had already signed an agreement with NASA to launch the unmanned “Dragon” spacecraft to Mars, starting in 2018. In return, Musk has promised to share valuable data about the Martian atmosphere with the agency. Now, as for the June 27 Mars colonization plans, investors will thank their lucky stars—literally—that there has not been, nor won’t be, a SpaceX IPO anytime soon.

Indeed, the Mars talk helps to distract SpaceX from the $50.0 million or so it owes Spacecom for failing to deliver a satellite in orbit, which would typically be about 1200 miles above earth. SpaceCom has also said it would not hire SpaceX again; not until it proves its ability to deliver. (Source: “SpaceX Could Owe $50 Million or Free Flight to Spacecom After Explosion,” Time, September 5, 2016.)