Billionaire Ron Baron Put $1 Billion Into SpaceX at the IPO. Here's Why He Calls It "The Largest Company on the Planet" in the Making.

The biggest IPO in history arrived on June 12. SpaceX (NASDAQ: SPCX) sold roughly 556 million shares at $135 apiece, raising about $75 billion. After the investment banks that underwrote the offering exercised their "greenshoe" option to purchase additional shares, that number is now $85.7 billion -- nearly three times the next largest raise in history.

Among those who managed to snag shares on day one was SpaceX bull and billionaire fund manager Ron Baron, who added $1 billion to his already massive stake in the company.

Baron has predicted that SpaceX will be the "largest company on the planet." Here's why I think he's wrong.

Ron Baron already owned a major stake in SpaceX

First, these are far from Baron's first shares. His fund, Baron Capital, started buying SpaceX through employee share sales back in 2017 and ultimately invested close to $2 billion across 27 separate private funding rounds.

The total size of the firm's stake is now worth more than $25 billion, making it its single biggest position out of $65 billion under management.

Baron thinks that's about to get much bigger. He told the hosts of CNBC's Squawk Box in May that SpaceX will "become the largest company on the planet" and that he believes "over the next 10 or 15 years, [it] is going to be worth $10 trillion, $20 trillion, $30 trillion, and I could be very low."

Why Baron thinks SpaceX will be worth $30 trillion

Baron is so bullish because he sees a hypergrowth company doing things on a scale no one else can match, saying, "What they've done isn't possible for anyone else to accomplish. Not possible."

He believes Starlink, the company's satellite internet and broadband business, will eventually reach 300 million users and generate $1 trillion in annual revenue.

For context, Starlink had about 10 million subscribers and $11.4 billion in revenue in 2025, so he's betting on a thirty-fold jump in users, whom he expects to pay three times for the service what they are today.

He also sees Starship, the next-generation rocket that is still in development, as a game changer for the launch business. In its normal configuration, Starship is designed to haul 100 to 150 metric tons of payload to low Earth orbit versus 17.5 metrics tons for the Falcon 9, the company's current workhorse.

He's confident that this will further cement SpaceX's place as the dominant launch provider and widen its already impressive moat.

Why I'm not buying the hype

Of course, the obvious headwind to further market cap growth is the company's valuation: Because SpaceX has a market cap of about $2.6 trillion compared to $18.7 billion in 2025 revenue, its stock is trading at nearly 140 times sales. That's an absolutely extreme price-to-sales ratio (P/S) for a company of any size, let alone one that is already operating at this scale. And remember, SpaceX is losing money too, posting a $4.9 billion net loss last year.

But of course, Baron isn't denying the stock is pricey by normal metrics. He's saying they don't matter because the opportunities for the company are so huge.

I get that. I just think his vision for the future, like Elon Musk's, is more fantasy than fact. Starlink's total addressable market will be much smaller than $1 trillion unless you believe it will replace the bulk of the telecom industry wholesale.

Image source: Getty Images.

Its technology is, by design, not great at providing service in metropolitan areas where the vast majority of paying customers across the globe live. This is a business that can enhance the existing system, not replace it.

And then, of course, you have xAI -- SpaceX's money furnace. The AI arm is struggling to grow revenue while burning about a $1 billion a month in cash. This situation can be improved, certainly, but for the foreseeable future, xAI will be a major drain on the company's resources.

That is, of course, unless it leans into leasing its data center capacity: A string of recent deals indicates that xAI is exploring that model. This could turn the business cash-flow positive, but it's a comparatively unremarkable business model. The lofty valuation of SpaceX rests on it being truly a one-of-one type of company. A data center operator is one of many.

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.