SpaceX Eyes IPO Amid Exposed $5B Loss: Will xAI 'Burn Rate' Drag Down $2T Valuation?

TradingKey - The Information reported that SpaceX's 2025 revenue exceeded $18.5 billion, while net losses simultaneously approached $5 billion. Analysis suggests these figures reflect the drag exerted on SpaceX following its merger with xAI.

Currently, reports indicate that SpaceX has confidentially filed for an IPO, with a potential listing date set for June this year; its target IPO valuation has been upwardly revised to over $2 trillion.

Will SpaceX's target IPO valuation be significantly discounted due to the impact of xAI? Are investors wagering on the commercial space sector willing to bear the expansion risks of xAI's business?

Burning $28 Million a Day—How Does the xAI Merger Impact SpaceX?

SpaceX's revenue exceeded $18.5 billion last year, driven primarily by strong growth in commercial space launches and its Starlink satellite internet business; however, the growth of another newly added segment, xAI, has been less than optimistic.

Internal documents released in January show that xAI spent $7.8 billion in the first nine months of 2025, burning through approximately $28 million per day on average, while quarterly losses continued to widen. xAI's net loss reached $1.46 billion in Q3 2025, a significant increase from $1 billion in Q1. xAI remains in a large-scale investment phase, with the majority of funds allocated toward building data centers, recruiting talent, and developing software.

Founded by Elon Musk, xAI was acquired by SpaceX in February of this year, with the company's ultimate goal being the development of an autonomous AI system to power Tesla's humanoid robot, Optimus. Musk stated that the acquisition of xAI aims to create the "most ambitious vertically integrated innovation engine on and off Earth."

However, the acquisition of xAI has been viewed unfavorably from the start, whether by Tesla (TSLA) or by SpaceX. Tesla shareholders voted last November on whether the company should invest in xAI, but the non-binding proposal failed to garner enough votes to pass.

Will xAI Dampen Investor Enthusiasm for a SpaceX IPO?

Despite the skepticism surrounding xAI, facts indicate that following its merger with SpaceX in February this year, SpaceX's valuation surged to $1.25 trillion, with xAI contributing $250 billion of that value. While xAI is in a net loss phase, its use of a "triangular merger" structure keeps its debts, legal liabilities, and contracts independent of the parent company, thereby preventing any actual financial impact on SpaceX.

Analysis suggests that the valuation increase resulting from the merger stems from a shift in valuation logic; the market no longer views SpaceX solely as a commercial aerospace company but rather as a space data center or even a space infrastructure giant. Even after accounting for xAI's potential losses, SpaceX's valuation has continued to skyrocket in recent months, now reaching a staggering $1.75 trillion.

Earlier reports from Reuters noted that within SpaceX's $1.75 trillion target valuation, approximately $1 trillion or more is contributed by SpaceX's core business, while the remaining $750 billion reflects assets such as Starlink, xAI, and X. This implies that SpaceX's own price-to-earnings (P/E) ratio will reach triple digits, with a price-to-sales (P/S) ratio exceeding 60 times its revenue over the past 12 months.

Compared to the potential losses from xAI, a greater concern currently may be the market's excessive frenzy over a SpaceX IPO. Given Elon Musk's history of over-promising and under-delivering, the market should be more wary of the "false prosperity" in SpaceX's current valuation.