Billionaire Investor Ron Baron Believes SpaceX Will Be Worth $30 Trillion

With just days remaining until SpaceX joins the public markets, there’s no shortage of hot takes out there on Elon Musk’s space exploration, satellite internet, and AI company.

Plenty of investors, including myself, have argued that the IPO looks overvalued and is likely to fall from its target valuation of $1.75 trillion, or $135 per share. The IPO is unique, as it’s received a push from big bankers, including JPMorgan Chase’s Jamie Dimon, and the company even tried to bend the S&P 500’s rules to join the benchmark index without meeting all of its standards, though S&P Global decided against it.

However, there’s no doubt that SpaceX has bold ambitions, including to colonize space, and the company claims an addressable market of nearly $30 trillion, or roughly the GDP of the U.S.

SpaceX bulls continue to tout the company’s long-term potential as well. One of them is Ron Baron, CEO of Baron Capital, a mutual fund manager. Baron was an early investor in SpaceX and believes its valuation could reach $30 trillion.

Image source: SpaceX.

Can SpaceX really be a $30 trillion company?

Baron began buying shares of SpaceX in 2017, after investing in Tesla, and has continued to buy the stock whenever employees sell their shares.

SpaceX is his fund’s largest holding, representing $15 billion of its $55 billion in assets under management. Baron predicted that SpaceX’s valuation would grow to between $10 trillion and $30 trillion in the next 10 to 15 years.

He sees most of the value coming from Starlink, which he said would provide internet for the entire planet, and from space-based data centers, which Elon Musk believes have an efficiency advantage over earth-based ones.

Baron believes Starlink, SpaceX’s primary source of revenue and the only profitable one of its three operating segments, will eventually reach 300 million global users and generate $1 trillion in revenue, implying an average revenue per user (ARPU) of about $3,300. In 2025, Starlink brought in $11.4 billion on roughly 10 million subscribers, an ARPU closer to $1,000, and its ARPU has declined as it enters markets in lower-income regions where it needs to charge less.

SpaceX will need a breakthrough

For any company to reach a valuation of $30 trillion in the next 10 or 20 years would be quite a feat, as that represents roughly half of the S&P 500’s market cap today, at a time when it is overvalued according to historical averages.

Tesla was able to skyrocket on the stock market by taking electric vehicles mainstream, but SpaceX faces a taller task, entering the market with a valuation already at $1.75 trillion, or in the top ten of American companies.

In order to push into the rarefied air of $10 trillion or higher, SpaceX will need to achieve a transformative mass market breakthrough, whether in internet, AI, space, or some combination of the three. Musk has accomplished some of his bold ambitions before, so it would be a mistake to call the $30 trillion mark impossible.

However, given the implications of that valuation, it will require some kind of high-tech market dominance.

There’s more visibility in the near term for the stock, and SpaceX is likely to struggle to justify its current valuation at roughly 100 times sales with slowing revenue growth and widening losses.

Still, as long as bulls like Baron stay behind the stock, the floor on SpaceX stock is likely to remain high.

JPMorgan Chase is an advertising partner of Motley Fool Money. Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase, S&P Global, and Tesla. The Motley Fool has a disclosure policy.