This podcast isn’t personal advice. If you’re not sure what’s right for you, seek advice. Tax rules can change and benefits depend on personal circumstances.
Use the player icons above to listen on your favourite podcast app, or read the full transcript below.
Nothing in this podcast is personal advice – you should seek advice if you’re unsure what’s right for you. Investments rise and fall in value, so you could get back less than you invest. IPOs are higher risk as you’re investing in an individual company with no public track record. As always, this is not a recommendation to buy, sell or hold any of the investments or companies we have discussed today. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.
Full podcast episode transcript
Anna
Hello, and welcome to this special edition of the Switch Your Money On podcast, from Hargreaves Lansdown. I'm Anna Macdonald, Investment Strategy Director.
Matt
And I'm Matt Britzman, Senior Equity Analyst.
Anna
Hi, Matt. So we thought this would be a really good chance to, give our viewers and listeners a bit of an insight into the SpaceX IPO and, and there’s so much buzz and excitement about it. We just thought this would be a good chance to talk through what you've been discovering from reading the documents and tell everyone really a little bit about how IPOs work and what to look for and how to think about them. Before we get started, though, the caveats are that this is not personal advice. You should seek personal advice if you're unsure what's right for you. Investments do rise and fall in value, so you could get back less than you invest. IPOs are high risk as you're investing in an individual company with no public track record. And this is not a recommendation to buy, sell or hold any investments in companies that we have discussed today. No view is given on the present or future value of any investment, and investors should form their own view on any proposed investment. So, Matt, just to take us right back to the beginning, can you tell us what SpaceX is and what the financials show?
Matt
Yeah. Thanks, Anna. So, yeah, I've been looking through the prospectus documents over the last week, and like you said, thought it would just be good to go through some of
those key financials. Talk a bit about what SpaceX does as a business. But again, just to caveat that this should not be seen as a replacement for potential investors
to read the full document. So if this is something that you're interested in, please make sure that you read those full offer documents which are available on the HL website. But back to SpaceX. So, you know, a lot of people would think about SpaceX as the rocket business. That's what you see on the news. That's where the business started. But this is now a much more complicated beast than simply rockets. And there's three core business units, that have been set out in the prospectus and how they report. So we have a space unit, a connectivity unit, and then due to a recent acquisition or merger, of X.ai, they now have an AI segment as well built into SpaceX. So I thought we'd just start
by going through some of the high level, financials for SpaceX as a business. So 2025 revenue for SpaceX as a whole came in at $18.7 billion. That was up 33% on the prior year. We also had numbers for Q1 2026, so the first quarter of the most recent year, where they reported $4.7 billion of revenue. That was a slight slowdown in growth compared to 2025. That came in at 15%.
Anna
So that 15% growth on 2025 are you saying?
Matt
Exactly. Yeah. On the first quarter of 2025. Yeah. So compared to 2025 as an entire year, which compares to 2024, that was a 33% growth rate. Thanks for clarifying that.
Anna
Understood. Yeah.
Matt
And kind of, so revenue is growing. Alongside that, the business is investing heavily in some of its future projects. So what we've actually seen is pressure on margins. And profits are in negative territory. So looking here at operating profits or losses specifically 2025 as the full year, $2.6 billion in operating losses and the first quarter of 2026. We've already seen $1.9 billion of operating losses. So based purely on the numbers, the
the operating losses so far this year, already 75% of 2025 losses, which would potentially suggest increased investment in different areas.
Anna
Yeah, yeah.
Matt
Anna maybe it's worth just spending a couple of minutes just talking about some of those kind of basic investing principles.
Anna
Yeah.
Matt
I think now's a great time when, you know, there's the potential to have a lot of new investors coming onto the scene because of a large IPO. It's possible for existing investors may have added more money to take part in this IPO. So I think just, you know,
one of the things that is important to do, and we talk about diversification all the time. But now maybe kind of as ever, is a good time to just remind investors of some of those core investing principles, right Anna?
Anna
Yeah, so I mean, there's basically I would say that there are two there are two things that you can do as an investor that, that are basically not the free lunch, but they do make you tend to be more successful. If you're patient, if you've got time on your hands and if you're diversified, then what you tend to do is to be able to smooth your returns over the longer term. You're not trying to time things. You're not trying to sell at the top and buy at the bottom. What you're trying to do is just hold a portfolio of investments of companies that maybe, you know, that they might be geographically diversified and, you might also have other assets in there. Some people will own fixed income, i.e. bond investments alongside stocks and shares investments. And there are plenty of assets. And by having a broad spread of assets, what you do is you allow yourselves to to be able to go through different economic cycles. Some companies are going to do better when the economy is strong, some are going to do well, you know, gently appreciate over time, some pay higher dividends. So by holding a broad
array of investments, then you can, you can protect yourself to some extent to the vagaries of stocks going up and down. You can protect yourself from maybe a certain economic, upset happening, by being exposed to different regions. You can, you know, there'll be there'll be less, for example, what we're seeing at the moment in the Middle East, there are some countries that are much more affected than others. If you have a broad portfolio of assets, you're going to be able to sort of ride that out to some extent. And actually we've always seen that markets can be quite volatile. Individual stocks are much more volatile. So by holding a broad array of them, you just have a better chance of achieving your investment goals, which is usually to be able to invest for the long term, to be able to really beat inflation and, and beat what you'd have if you just put your money in the bank but you can only do that if you if you are in the market for a decent amount of time and you're patient and you know, that markets do go up and down. But over the longer term they tend to appreciate. Now Matt we know there's also a few differences between, what UK IPOs, how they how they are, how they work really in the market and between, and US IPOs. Do you want to take us through those main differences?
Matt
Yeah, exactly. So one of the things, this is kind of, you know, what's going to happen on
IPO day for, for those that that do choose to take part. So one of the things that we'll have is that there won't initially be a live price. You may not see the shares as tradable. There's nothing wrong with that. There's usually an auction process that happens at the start of a US IPO. Now, that's not something that UK retail investors are able to take part in. So you know, there's going to be this window here where from US markets open at 14:30. But there will be a window where you won't be able to trade those shares immediately after 14:30 because of this auction process.
Anna
And will we see a price moving on the screen then or, or what will happen?
Matt
Yeah. So there may be a reference price that's shown on the screen. Whether or not it then opens after auction higher or lower than that. It completely depends on what happens during that auction process. So yeah, it's just going to be a reference. Don't take that as gospel as to what the share price is going to open at.
Anna
Okay.
Matt
So yeah, whilst that auction process is running, you won't be able to buy or sell in the normal, process. And the other thing to make sure is that the timing of that auction process is uncertain. So for high profile large IPOs, it's not uncommon, for the first trade
to happen later in the afternoon, even into the early evening UK time. And we don't have any information as to how long that auction period is going to be in advance. So it's, you know, if you were looking to trade on day one, that's going to be a bit of a waiting game.
Anna
So I suppose when we're thinking about, trading IPOs, I mean, that generally
when we think about any stocks and shares that you're buying, it should be part of a diversified portfolio. And you should be thinking about it for the longer term and not trying to be too active on a day to day basis because it can be very difficult to trade correctly. And it sounds to me like, you know, the auction period, for example, is just one of those illustrations that IPOs are, more complex and difficult sort of scenario to navigate.
Matt
Some of the quirkier bits from
Anna
Yes.
Matt
From the filings next. The first one which caught my eye is the quite outlandish terms that are aligned to Elon Musk's pay package, at SpaceX. Now, this is certainly not your usual CEO bonus share scheme, with some of Elon Musk's potential share rewards, which are linked to, I mean, you know, for a typical company you might have share based rewards linked to things like profitability, cash flows, maybe market cap. And there are some of those in this as well, yes. But there's also a term in this which requires there to be a permanent human colony on Mars with at least 1 million inhabitants. And yes, that is literally the wording in the prospectus document and in the terms for Elon Musk's pay package. So a million inhabitants and I noted the word inhabitants, not humans. So I guess maybe you could have a million robots... 999,999 robots and one human?
Anna
(Laughs)
Matt
Okay, so quite a wild...
Anna
Is there a time horizon on that
or is it just some eventual?
Matt
Yeah, these are just kind of. Yeah. Perpetual kind of targets. So there's the market cap targets in there as well that he has to hit. But in addition to the market cap targets. It's not an “and or” it's an “and this”. You know human colony on Mars target built into the pay package as well. So quite an interesting, I mean, Elon Musk is well known for having some interesting pay packets at Tesla in the past, but this, you know, this is the cherry on top. Some of the other bits that we have in here. So from a balance sheet standpoint and a debt standpoint, there is a $20 billion loan in the background. So they took on a bridge loan last year. And one of the terms of that loan, which I think is quite important, it said it has to be repaid within six months of a successful IPO. So just an important nuance there for investors to be aware of is that there is this kind of floating $20 billion loan that would need to be repaid or refinanced within six months of a successful IPO.
Anna
Okay. So that could be taking up quite a significant chunk of the cash raised from the IPO?
Matt
If they were to use the cash to pay it back. Yeah, there is, there's obviously the option potentially of refinancing that as well.
Anna
Matt, one of the things that I saw that you've been noting is the, option that they have to buy Cursor, which is an AI coding company. Can you talk about that? It seems to be at a significant valuation.
Matt
Yeah, exactly. So this is again, another one of these things that's kind of buried in not the fine print, but just in the, the masses of, prospectus documents. That investors again
should be going through, in detail. But yes, there's a potential agreement in place to acquire Cursor. Now, Cursor is like you said, an AI coding company. It has language models of itself specifically targeted at that kind of coding segment. And we've spoken about this before. And for those that kind of follow the Anthropic, versus OpenAI debate, will know that coding has been a key part of that battle. Also over the last six months you know, we've seen for a long time. So Cursor fits within that kind of coding AI, bracket for software engineers, etc. So the implication here for SpaceX and potential investors is that if this deal does happen after the IPO, there's a $60 billion implied value for this and that would be paid for in new SpaceX shares. So the potential implication for investors
is that there is the potential of a $60 billion, dilution event. So that means new shares being issued onto the market. If this deal does go through. So something just to be aware of there that this is kind of already in the wings. It's in those documents and
has the potential to be a dilution event. If and when that happens.
Anna
That's interesting. Yeah. I mean, it's interesting and I suppose that's one of the reasons why companies do become public, you know, eventually is that so that they've got the ability to do that. But it is quite a significant deal to be happening. In, the midst of, a very, you know, a large IPO as well. So yeah, that's interesting to know. So, I mean, what you do find, through these documents and, that it is incumbent on them to lay out what they see as the key risks. But I think that's pretty interesting for us to maybe finish off on is what does SpaceX highlight really as a, where do they see the risks in their business?
Matt
Yeah. Great question. And just for listeners this, you know, we have an article on our website which goes through the kind of financials and these key risks that we've talked about today. Again, not to be a replacement for the prospectus, but it kind of brings in some of the key financials on a factual basis that we've seen from running through those numbers. So that is available on the website for another look. But some of the key risks that we've highlighted and that this has again been pulled out of these prospectus documents, the first that actually centers around specifically the Starship, rocket and kind of launch system combination, which is, as I said, we know they have plans for this to be the next delivery system into space, which can bring larger, quantities of mass. So if you want to have data centers in orbit, for example, you need to be able to put a lot of mass into orbit. And this is one of the things that they're hoping will be able to do that. So they called out Starship specifically as being central to a lot of the businesses future plans. And you know they mentioned things like delays and technical issues could affect more than just the launch business. So kind of we spoke about those three businesses before: space, connectivity and AI, they've pulled out this as a risk that could impact all three of those business segments. And the other one they called out
is regulation as a key area. So for the space business specifically. And again, as we said, these are all kind of linked. You know, you have to get approvals to launch things into space. You can't just build a rocket and chuck it up there. So there is regulation that is required in order to do that. There's regulation required for the Starlink business in terms of delivering internet to homes and back down to earth. And then there's regulation in the AI business, which we are seeing kind of become a bigger topic more recently, as you know, everyone's using it lot more. So there's also regulation around data and the use of AI etc., which they called out, as a specific risk.
Anna
Okay.
Matt
And you know. Just kind of as we, as we start to close here, I think it's worth just reiterating the kind of message that we've had throughout, which is that this is, an IPO that's attracted lots of attention. We would always suggest that clients do their own work. There's a lot of content to get through, but we always recommend investing for the long term, not the short term. So as a long term investor, understand the business that you want to invest in, understand what it does, what the risks are. Look at the financials. Make sure you're comfortable with all of those. For those investors to whom this is suitable. So always just a reminder, kind of as ever, to invest for the long term.
Anna
And invest as part of a broader portfolio too, ideally. So because we cannot offer, and do not offer, advice on the suitability of, of any IPO for you. Like any investment, there are risks. And you should ensure that you get the information you need to make an informed decision. Any decision to invest should be made solely on the basis of the information provided in the prospectus and in the supplementary documentation. The value of investments can fall as well as rise, so you may get back less than you invest. So thank you very much for listening to this special edition. And, Matt and I will be back
with you again very soon. That's a goodbye from me, Anna Macdonald, and goodbye from Matt.
Matt
Goodbye.