It is not totally surprising that retail traders and mutual funds have given Elon Musk’s SpaceX a $2tn valuation, despite it having revenue over the past year of just $20bn. But anyone who thought such a cocktail of Yolo and Fomo could never spread to the wonky, sober world of bonds might want to think again.
SpaceX is about to sell $20bn of bonds, following large debt issues from other tech companies such as Alphabet and Meta Platforms. The big difference: where they are hugely profitable software-centred companies, SpaceX is lossmaking to the tune of $9bn a year. Nonetheless, rating agencies S&P Global Ratings, Moody’s and Fitch have assigned Musk’s company investment-grade scores within the BBB band.
Rating agencies have pretty strict criteria for their ratings, based on existing debt levels and cash flow. SpaceX, reassuringly, has little debt and $101bn of cash after its initial public offering on June 12. But its lack of profit makes the rating unusual. Perhaps the agencies, such as index provider Nasdaq, decided that SpaceX’s considerable quirks justify reconsidering previously held norms.