SpaceX Wants to Make Human Civilization "Multiplanetary." Here's What That Means for Its Upcoming IPO.

The SpaceX IPO (initial public offering) is expected to take place on June 12. The company's public debut is expected to break records. Reports suggest that SpaceX is targeting a $1.77 trillion valuation, with hopes to raise up to $75 billion in fresh capital.

It's hard to put SpaceX into a box. While most laypeople see the company as a rocket stock, it's also a satellite stock. The company's biggest money maker is currently its Starlink internet service.

But SpaceX is even more than just a rocket and satellite company. Most of all, the company hopes to become one of the largest AI stocks on the planet. Just take a look at the company's claimed total addressable markets (TAMs) as described in its recent IPO prospectus: "We believe we have identified the largest actionable total addressable market in human history. We estimate that our quantifiable TAM is $28.5 trillion." A whopping $26.5 trillion of that $28.5 trillion total is related exclusively to AI.

Digging deeper into the prospectus reveals even more surprises.

Our mission is to build the systems and technologies necessary to make life multiplanetary," the company boldly claims near the beginning of the prospectus. "To do this, we have formed the most ambitious, vertically integrated innovation engine on (and off) Earth with unmatched capabilities to rapidly manufacture and launch space-based communications that connect the world, to harness the Sun to power a truth-seeking artificial intelligence that advances scientific discovery, and ultimately to build a base on the Moon and cities on other planets.

These are incredible claims. But it's important to put them into context. In terms of the company's upcoming IPO, here's how to put SpaceX's "multiplanetary" dreams into perspective.

Here's how to think about SpaceX's "multiplanetary" mission statement

SpaceX CEO Elon Musk isn't shy about making bold predictions. Tesla (NASDAQ: TSLA), for example, has consistently missed Musk's targets over the years. Over the past decade and a half, Musk has made the public incredibly bold claims about where the company will be months or years from now. He has been wrong so consistently that there is an entire Wikipedia page dedicated to compiling his overly ambitious predictions.

But here's the thing: Despite Musk's inability to provide accurate timelines, Tesla has still become one of the largest electric vehicle (EV) producers in the world, earning a market cap well above $1 trillion. I expect the same to prove true for SpaceX. Even the company's bullish IPO prospectus acknowledges the challenges involved.

"We face a number of challenges relating to our business and growth strategy and, ultimately, the achievement of our mission to make life multiplanetary," the company admits, adding:

As a result, the timeline for certain of our initiatives involving unproven or new innovations, including...the establishment of a lunar economy and interplanetary industrialization, and the launch cadence required to achieve these goals may be difficult or impossible to determine. Our growth strategy may take longer to execute than anticipated, and you may not realize a return on your investment within the timeframe you anticipate, or at all.

Image source: Getty Images.

That last point is most critical for IPO investors to understand. SpaceX will soon have everything it needs to pursue its vision. It will have the rocket technology, the mandate, and most importantly, the capital to make realizing the early innings of this vision a reality. But that doesn't mean that it will create shareholder value. The company, after all, has yet to turn a profit. And heavy investment may make it difficult for profits to appear anytime soon. That means SpaceX may need to sell more stock to plug the financing gap, resulting in ongoing shareholder dilution.

An incredible business doesn't always make for an incredible investment. SpaceX's dreams are big, but the timeline to achieving those dreams will likely be much longer than most traditional investors are willing to tolerate. So yes, the company's "multiplantary" vision is reasonable despite its boldness. But that doesn't automatically make the IPO a worthwhile endeavor for retail investors.

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.