Big boosts to fill: SpaceX’s giant IPO

[MUSIC PLAYING] The Economist. Hello and welcome to the Intelligence from The Economist. I'm Rosie Blore. And I'm Jason Palmer. Today on the show, why are young men sowing on Donald Trump and how the judgment of Paris changed the world of wine? [MUSIC PLAYING] But first. [MUSIC PLAYING] Later today, SpaceX are going to try to launch the third version of their enormous, powerful, and very troublesome Starship rocket. Tim Cross is a senior science writer at The Economist. The launch has been postponed over and over again. It was supposed to happen on Tuesday, then Wednesday, then Thursday. We got the vehicle totally loaded. We hit a couple of different holds as we worked through that count. Again, new rocket, new pad. We're learning a lot about these systems as we execute them for the first time. And we're not able to basically troubleshoot all of these issues in those final seconds to get to launch. The aim of the mission, which is Starship's 12th test flight, is to try out a whole series of upgrades that are supposed to make it easier to recover the second stage of the rocket from orbit. And if that works, it'll be a big step towards SpaceX's goal of eventually building a vast fleet of these things. SpaceX's launch has often get a lot of coverage, but this one gets even more than most. And that's because earlier this week, the company kicked off the countdown towards another historic launch, this time of the biggest IPO ever, next month they're hoping to raise up to $75 billion from investors. Tim, a lot of big bold ambitions there. Before we get to the IPO, just tell me a little bit more about what this space mission was supposed to achieve. So it's supposed to help turn Starship into a fully reusable rocket. And reusability is what SpaceX has always been about, right? If you speak to Elon Musk, he'll say, "Rockets are crazy. We build them. We fly them once. And then we dump them into the ocean or dump them into space and have to build a new one each time." So his favorite analogy is air travel. You build a plane, you fly it to an airport, you blow it up, and you have to build a whole new one. You couldn't possibly have cheap air travel or really any air travel with a model like that. So SpaceX wants to turn rockets, basically, into things that are a bit more like airplanes. They've sort of done that with their existing rocket, the Falcon 9, the bottom half of that, the first stage can be reused, but not yet the top stage. One of the things with Starship that they're trying to do is make it so that both stages can be reused. And this is what all these test flights really are in aid of, getting it to a point where you can land this thing in the condition that with a fairly minimal amount of work, it's ready to fly again soon. So all of these test flights are, of course, very expensive as our SpaceX expansion missions overall. Presumably, that is the basis of the company wanting to list its shares publicly now. Yeah, it's interesting because if you look back in history, you can get endless quotes of Musk himself or Gwynne Shotwell, who's the president of the company, saying we're never going to take SpaceX public or we'll only take it public when we're regularly flying to Mars. Musk, he's got experience with public markets, obviously through Tesla. And he's said many times, he basically thinks they're too short-termists, they're too obsessed with quarterly performance. This isn't suitable for a firm whose eventual goal is to build a city on Mars. But I think like you said, if you look at the IPO, the amount of money they're having to spend on the various ambitions they have along the way. So developing Starship is part of that, but building out Starlink and I think crucially, building this fleet of space-going data centers that they want. All that is looking like it's going to be very, very expensive. And I think the best guess is, it's just too hard to raise that kind of money from private markets. This is being talked about as the biggest IPO in history. Is that right? We think so, so they want to raise about $75 billion, which is quite a bit more than Saudi Aramco, but the previous record owner raised when it went public in 2019. And the valuation is really mind-boggling as well. They're looking at around $1.75 trillion, which would put it well into the top 10 of most valuable companies in the world. It's gone up about 10 fold in the last two years. And it's somewhere on the order of 90 times more revenue than they brought in last year. If you want to compare us to Tesla, which also benefits from the kind of Musk Halo effect, that trades at just 16 times its revenue. So there's a huge amount of growth being priced into this, assuming they get anywhere near their target valuation. So Tim, is it worth it? Talk me through the different bits of the company. Is it worth it? I think you'll have to decide that for yourself, but I can walk you through the plan. SpaceX essentially has three businesses now. So the one that everyone's familiar with is launch. It's the rockets. They are the biggest launch provider in the world by an enormous margin. So they take about 90% of everything that goes into space, goes into space via SpaceX. They're their own biggest customer. So most of those launches are done internally for their own purposes. But they also fly missions for scientific agencies for other commercial customers for America's government. So that's their most well-known line of business, I guess. The second and slightly newer one is Starlink, which is the internet service provider that they have. So you can buy a Starlink aerial and bolt it to the roof of your house. And you can get the internet beamed down from space, and no matter where you live on the planet pretty much. That's why they are their own customer for most of their launches, because most of the launch has put Starlink satellites up. The constellation's enormous. It's closing in on 10,000 satellites. They have about 10 million customers. It's the fastest growing part of the business. And according to the IPO documents, it made a profit of about $4.4 billion in 2025. The newest part of the business is XAI, which is Musk's AI lab, which SpaceX merged with last year. That is losing money hand over fist. To compete in AI, you have to have these enormous data centers. You have to splurge huge amounts of cash on warehouses and chips to put in them. So that lost $6.4 billion in 2025, which is more than Starlink brings in. But it's XAI and the AI business in general that they hope is going to be this mega business that will boost their valuation into the stratosphere. So these are very big bets, Tim. How do you rate the overall future vision for SpaceX? The entire history of SpaceX is a series of increasingly big bets, most of which paid off. There are three things here that have to work for this vision to happen. One is Starship itself. And this is why there's so much attention paid to it. We talked a bit about the Falcon 9 earlier and how the first stage is reusable. SpaceX see the reusability revolution is only half finished. If you can a, make a much bigger rocket and Starship is the biggest rocket that anyone's ever tried to fly. And you can make both bits if it reusable. Then you can really, really slash the cost to get things to orbit. So they talk internally about $200 a kilo, $100 a kilo. And just to give you a sense of scale, the Falcon 9, they charge external customers about $4,000 a kilo. We think internally it may be cost them about 1,000. And before the Falcon 9 came along, you were talking mid to high five figures. So there's already been a huge drop. But it has to go even lower, ultimately, because it's necessary for their goal of getting to Mars. But in the short term, it has to go lower because their current cash cow is Starlink. Starlink is signing up, customizing a very, very rapid rate to the point where bits of the network are now starting to get congested. What they want to do is fly more capable satellites, because that means more capacity. But the satellites they've developed are too big. They don't fit in the Falcon 9. You need Starship to fly them. Without Starship, you can't grow Starlink as fast as you'd like to. And at the moment, Starlink is really the only part of the company that's bringing in money. If you can get both of those things firing, that clear the way for the really big bet, which is this idea that the future of AI is not building sheds in the middle of nowhere and filling them with chips. It's putting these things in space instead. That may sound a bit mad. I think it's less mad when you start looking at it closely because you get a huge amount of free sunlight. The cooling in some ways becomes easier. And maybe most importantly of all, you don't have to deal with protests and permitting and this wave of data center bands that we're seeing in the US. These are extraordinary ambitions, Tim. Will investors be convinced? I'm not sure. I think some of the people that back to SpaceX early might see now as a very good time to bank some of the massive profits they've made. On the other hand, I do think there's probably quite a large number of investors out there who just like Musk's vision and will be very willing to buy into it. On that subject, you mentioned ambition. But really, we haven't seen the half of it. If you look at the IPO documents and SpaceX's own statements, their ambitions are enormous. They don't just want to build a few starships. They want to build fleets of these things. So they're building factories that are supposed to be able to turn out a thousand a year and they want to fly them every day. And you can do a bit of back-of-the-envelope maths. One year of that will be something on the order of a 20,000 times boost to the world's capacity to take stuff into space. If you look at Musk's incentive structure in the IPO, they talk about valuations up to $2,3,4,5, $6 trillion. He has a target to fly about 1,000 times more computing power as currently exists in the entire world into orbit and another one to put a self-sustaining city of a million people on Mars. So I think when it comes to ambition, we're just waiting in the shallows at the moment. Tim, thank you so much for talking to me. Thanks, Rosie. [Music] [Music] When it comes to making a show of manliness, a few politicians can match Donald Trump. Robert Guest is a deputy editor of the economist. One day he's swaggering into a cage fighting stadium to the tune of Kid Rock's American badass. Making his way into the building. One of the bigger mixed martial arts fans, I know, president Donald Trump. Another day he's shrugging off a third attempt on his life, with the observation that only the most impactful politicians attract would be assassins. The people that do the most, the people that make the biggest impact are the ones that they go after. Voters of long thought of Republicans as the daddy party, tough on defense, tough on security, and the Democrats as more maternal. Looking after poor people fussing about nasty words, that kind of thing. Asked which party is more the party of men, Americans tell pollsters with only seven times like clear to say that it's Republicans than Democrats. And Trump supercharged that with his appeals to the masculine, eared in fact there was one incredible poll that said that a large proportion of men actually felt more masculine after voting for him. But his allure seems to be fading for men and particularly for young men. Let's go to some of the polls that you're talking about there, put some numbers to this, what's changing? In his three runs for the presidency, Trump has always won the mail vote, and always won overall when his opponent was a woman. In the most recent election in 2024, the surge of young men voting for him was considered one of the reasons why he won, according to a Harvard IOP poll, nearly half of men aged 18 to 29 voted for. I mean, it's unusual for young people to vote Republican. But now his support is really sagging among this group, only about 30% of young men now approve of him. And why is that what's changing among those young men? Well, it turns out that virile vibes are not enough. They may like some of the way he projects himself, but there are more important things. Young men have practical concerns like everyone else. And actually the young have probably more practical concerns than people in the middle of their careers, because they're still trying to establish themselves. They want to find a job. They want to maybe buy a home, maybe attract a partner, raise a family someday. This is especially true for young men who voted for Trump. In an NBC poll, they ranked having children as their top life girl. The thing is, having homes and families, it costs money. Trump said that he would make America affordable again. He even promised that he'd make prices fall from the level they were at. But not only has he not done that, but he's done the opposite in ways that are really obvious. His tariffs have raised the prices of lots of things, and his war of choice in Iran has pushed up the price of fuel and food in ways that every voter can understand. Everybody, I mean right now, everything's expensive, you know, rent, everything, bills, groceries, you know, everything. Miguel Martinez is a 21-year-old restaurant worker in Flouried Branch, Georgia. You can't even go inside the grocery store right now and not spend $80, you know what I mean? Miguel lives with his parents. He would like to be able to afford to move out and start a family, but he's saying that just seems impossible. And this is a complaint that pretty much every young man that I and my colleagues spoke to for this story, it mentioned. And if they are pinning that inability to advance in life on Mr. Trump, does that mean that they are therefore flooding to the Democrats? Souring on Trump doesn't imply necessarily loving Democrats. Lot of young men feel spurned by them. Democrats seem much more eager to talk about the problems men cause, rather than the ones that they face. It was an economist you go up, Paul. Found that more than half of Americans think there's an anti-male bias problem in the Democratic Party. Another poll found that Democrats are five times lighter than Republicans to admit to having an unfavorable view of men in general. Now that's a very large group to have an unfavorable view of in general. And so what does this mean for the coming November midterms then? How young men will vote when it comes time for that? Young men have become swing voters. In a Harvard poll, 33% said they'd back a Democrat, 25% said they'd back a Republican, and a whopping 38% said they didn't know or they wouldn't vote. So there really is everything to play for the parties here. Oh, personally, I'm kind of just done with politics because they're all liars. Jeremiah James K. Jr. is a 23-year-old general manager at a car wash. He's pretty disenchanted with both parties. They say they're going to do something for you and then they don't do it. And I feel like a lot of people feel that way right now. Neither parties striking the right notes. Republican talkers, if there's only one legitimate life path, you get a job, get married, have kids. The Democrats sometimes sound as if any young man who aspires to that wants a tradwife, wants to go back to the 1950s, Richard Reeves, who found his the American Institute for Boys and Men, point out that there really isn't any evidence that lots of young men want tradwires. They just want a family because that's likely to give them a purpose in life. They're not reactionaries the way a lot of the Democrats seem to think they are. But there is a real difficulty getting those life markers. They're finding it harder than the previous generation did. And a lot of that's because both parties have been getting the policies wrong. So then what should both parties, either party politicians in general, be doing to capture the men who have fallen by the wayside? For the Democrats, the first step is to acknowledge that young men have problems. And some of them are doing that, Gavin Newsom in California, wears more in Maryland. But the next step is to try to do something about it, and this is much harder. But there are certain levers that they can pull. And one of the really big ones is housing. There's strong academic literature showing that when housing is very expensive and in America, it's much too expensive because it's so difficult to build anywhere near where the jobs are. Young men are much more likely to remain living in their parents' basements, angrily playing video games, not finding a good job, not progressing, not getting to the stage where they can get married and have kids. And this is both bad for the country, and it's very bad for the young men. It makes them very frustrated. So if you could remove some of the obstacles to building houses, this is a policy that's not going to show any results before the midterms, but that would make a huge contribution for making young men feel that they have a future. Robert, thank you very much for your time, as ever. Thank you. Talking about Donald Trump, what are his policies doing to America's economy? Yes, it's growing faster than other G7 countries, and yes, it's stock markets are riding high. But we calculated that Americans are paying a mega-tax, a price for Trump's tariffs, mass deportations, and chaotic policy-making. That's what we're talking about on this week's economist Insider. Our video series where you can see how our journalism comes to you every week. The dynamic sometimes heated debates over what's happening in the world and what that means. This week our editor-in-chief, Sunny Mint and Beadows, Deputy Editor Edward Carr, and an array of the brightest minds at the economist will be unpicking this mega-tax. If you're a digital subscriber, you can watch without signing up for anything extra. If you're listening free, I've put a link in the show notes so you too can watch extended clips from Insider. 50 years ago, on May 24, the unthinkable happened in the wine world. Alexandra Sewichbass is the economist culture editor. An English wine merchant named Steven Spurrier gathered the great names and noses of French wine for blind tasting in Paris. Among celebrated wines from Bordeaux and Burgundy, he included reds and whites from California's Napa Valley. Everyone expected the French to win, but two wines from young, unknown producers won the contest over their French counterparts. This event would be marked in history as the judgment of Paris. The judgment of Paris was the shock heard round the wine world. One French official later described the tasting as "our waterloo". The French blamed the judges. One was accused of setting back Burgundy invineards by 100 years. Spurrier became persona non grotta in French wine circles and was even kicked out of a winery years later. Napa's victory had two balthazar-sized effects. First, it sparked a man for Californian wines at home in abroad. Exports of American wine was a great deal. more than quintupled between 1975 and 1980. Second, it stokes the ambition and confidence of new world producers in places like Australia and Argentina that they could one day rival France's great bottles in terms of quality. Following the judgment of Paris, both American and French wines boomed as they enjoyed new markets and newly minted middle-class wine drinkers. But 50 years on, the scene is less convivial. Wine consumption has been declining with Gen Z and baby boomers alike, preferring to drink less but better. Of all the wine regions in the world, Burgundy has been doing the best. It's smaller than Bordeaux and highly coveted by wine-efficient autos. In Napa and Bordeaux, the mood is tensor. I toured Chateau, Angélice, a revered winery in Saint-Emillion in the Bordeaux region. Stephanie de Bois, Riveaux, is the president and CEO. She told me that wine is on the heart and mind of health officials who say no amount of alcohol is safe. She strongly disagrees with wine being so villainized. - When I hear sometimes wine is put in the same category as a prostitution, drugs, it's so important. Education, the learning as well, teaching these youngsters what wine is about, that wine cannot be just limited to alcohol. - Today, Bordeaux and Napa are both experiencing economic crises and are at a turning point, but their suffering has different causes. Bordeaux produced a bubble of too much wine that was sold for the wrong reasons to the wrong clients. Chinese buyers had great thirst for Bordeaux' procedure labels until she'sing paying crackdown on corruption and lavish gifts and sales sputtered. That left wine makers who had been raising prices vulnerable to a collapse in demand. Napa's wine makers are feeling pinched for different reasons. In recent decades, they doubled down on the American market, selling to baby boomers at high prices rather than prioritizing a global footprint, but they are buying and drinking less. And now Napa's most important international market, Canada has dried up after most of its provinces banned American alcohol in retaliation for tariffs. Sales of American wine there fell nearly 80% in 2025. In addition, the cost of doing business in California, like France, is hangover inducing, so is the red tape. Some wineries are leaving grapes unpicked. Others are getting picked up by larger companies. Today, Stagg's leap, one of the winners of the judgment of Paris 50 years ago, is 100% owned by an Italian firm. Bonary Rom, a chateau leftler in Bordeaux, says to survive, producers need to be nimble and adapt. Doesn't matter if you're a small farmer or a top, top famous producer, you always gotta keep agile and think, how should they react? Climate is changing, the market is changing. Geopolitical situation is changing very rapidly all the time. If you're gonna start thinking ten years, what I'm gonna be telling you. So, 50 years after the judgment of Paris, today, the competition is not between Napa and France. It is between wine and everything else. (dramatic music) (upbeat music) That's all for this episode of The Intelligence. Tomorrow on the weekend intelligence, Reikers Island, the jail of New York City, is violent, unsafe and slated for closure. Our correspondent looks at the plans to build a new prison in Manhattan. Prime real estate, so the only place to go, is upwards. The jail scraper, do listen, you'll need to be a subscriber. The editors of The Intelligence are Chris Impe and Jack Gill, our deputy editor is Sarah LaNuke and our sound designer is Bill Ro, with help this week from Mark Borrows. Our senior producers are Henrietta McFarlane and Alize Jean-Battiste. Our senior development producer is Rory Galloway and our senior creative producer is William Warren. Our producer is Anne Hannah and our assistant producer is Kunal Patel, with extra production help this week from Emily Elias and Eleanor Sly. We'll all see you back here for The Weekend Intelligence tomorrow. (upbeat music)