SpaceX made history in June when it pulled off the biggest U.S. initial public offering ever. Billionaire investor David Einhorn believes investors may remember the milestone for a very different reason in the road. Greenlight Capital founder has expressed concerns that the valuation of SpaceX at around $1.77 trillion for its IPO did not correctly reflect the risks associated with Elon Musk's massively capital-intensive ambitions, according to Einhorn's recent investor letter.
His interest is not whether Starship succeeds, or Starlink continues to attract customers, or Musk ends up realizing his objectives in artificial intelligence. Einhorn worries about how SpaceX is going to pay for it all. Shortly after its IPO, the firm got investment-grade credit ratings from Moody's, Fitch, and S&P Global Ratings.
SpaceX has a Baa1 rating with a stable outlook from Moody's, a BBB+ rating from Fitch, and a BBB rating from S&P. Morgan Stanley's predictions show how much outside financing SpaceX would require. Analyst Adam Jonas does not anticipate SpaceX to have positive free cash flow until 2035 and expects average external capital needs between 2027 and 2034 of over $84 billion a year.
And he believes the repercussions might go beyond just SpaceX itself. The crux of Einhorn's argument is SpaceX's credit rating. The firm earned investment-grade ratings from all three major rating agencies immediately after going public.
Moody's awarded SpaceX a long-term issuer rating of Baa1 with a stable outlook. The rating agency cited among the considerations SpaceX's position in orbital launches, Starlink's cash-flow generation, and the company's vertically integrated activities, according to Investing.com. Fitch granted SpaceX a BBB+ rating, while S&P Global Ratings gave it a BBB rating.
Both also had a stable outlook. These scores are important because SpaceX has big ambitions for the future that involve a lot of money. Investment-grade firms usually have access to a larger pool of debt investors and usually pay less for borrowing than speculative-grade enterprises.
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