In a pitch to private investors, Elon Musk once predicted that one of his companies would quintuple its revenue to more than $26 billion and quintuple its customer base by 2028.
That company was Twitter and those projections were made as Mr. Musk prepared to buy the social media company for $44 billion in 2022.
Today, Twitter, which has been renamed X, has fallen far short of what Mr. Musk said would happen. The social media platform’s ad revenue plunged 65 percent last year. And it was ultimately folded into SpaceX, Mr. Musk’s rocket company, this year.
Now as SpaceX readies for a blockbuster initial public offering, Mr. Musk and his investment bankers are selling even loftier propositions about what the rocket and artificial intelligence company will achieve. But those proclamations, coupled with Mr. Musk’s history of overpromising, have some investors increasingly worried that SpaceX — which could go public at a $1.77 trillion valuation — may burn them.
“It really does feel very much a ‘don’t look at the man behind the curtain’ situation,” said Jim Chanos, the founder of the investment firm Chanos and Company, who predicted the 2001 collapse of Enron, the energy company that was found to have engaged in accounting fraud.
Mr. Chanos and others said they were concerned with SpaceX’s finances. The company lost $4.3 billion in the first three months of the year alone and is spending heavily on A.I. development. Revenue was $4.7 billion and growing, but it was far lower than that of tech giants like Meta, which brought in $56.3 billion in the same period and has a stock market valuation of $1.4 trillion.
At the same time, SpaceX has promised that its total addressable market — which is its revenue opportunity if it captured all the demand across its various industries — is the largest “in human history” at $28.5 trillion. The figure, which depends on SpaceX proving that it can put A.I. data centers in space and develop factories on the moon, dwarfs China’s annual gross domestic product by more than $8 trillion.
Michael Burry, a hedge fund investor featured in the book “The Big Short” for his predictions on the 2008 financial crisis, said in a Substack discussion last month that any increase in SpaceX’s stock after its I.P.O. would “be on hype and technicals.”
“Nothing in that S-1 suggests it is worth $1 trillion let alone $2 trillion,” Mr. Burry wrote, referring to the company’s I.P.O. filing.
Even some SpaceX shareholders have doubts. Ross Gerber, the chief executive of Gerber Kawasaki, an investment firm that owns SpaceX stock, said the company’s projections reminded him of unverified information that young start-ups used to woo investors. He said he was alarmed by SpaceX’s likely valuation of $1.77 trillion, which would be more than four times the $400 billion that the company was valued at just 13 months ago.
“Investors are paying an extremely high price for this stock,” Mr. Gerber said.
A SpaceX spokesman did not return a request for comment.
SpaceX’s bankers, including Goldman Sachs, which is leading the I.P.O. process, have added to the sweeping projections. The Financial Times earlier reported that Goldman had told a potential investor that it expected SpaceX’s total revenue to reach $474 billion in 2030, up from $18.7 billion last year. Morgan Stanley, which is also working on the I.P.O., said in an analysis shared with investors that it anticipated SpaceX’s revenue would hit $3.4 trillion by 2040, according to The Wall Street Journal.
A spokesman for Goldman declined to comment. Morgan Stanley did not return a request for comment.
Morningstar, an investment research company, issued a more sober analysis. The firm said that SpaceX’s I.P.O. price was “overvalued” and that the company was worth around $780 billion. Nicolas Owens, a Morningstar equity researcher, gave SpaceX a 7 percent chance of getting its latest rocket, Starship, to a point where it can be used over and over again like a regular plane, and proving that A.I. data centers were cheaper and more effective than their terrestrial counterparts. In the most optimistic scenario, Mr. Owens said, SpaceX could be valued at $1.97 trillion.
“We’ll know in two to three years if Starship is reusable or a GPU rack in space will be viable or offer some cost savings,” he said, referring to the computer chips used to power A.I. technology. “But the company is asking everyone to decide on Friday if that’s possible and what it’s worth.”
Mr. Musk has also shown a propensity to change his business goals on the fly, analysts and investors said. It was not until last year that he first spoke of data centers in space, and he doubled down on the idea in February after merging SpaceX with his A.I. company, xAI.
In April, SpaceX said it had agreed to acquire Cursor, an A.I. start-up that develops coding software, for $60 billion, shifting the company into an area it was not previously focused on. Mr. Musk, who has spent billions to build his own frontier A.I. models and his A.I. chatbot Grok, also appeared to change course recently on other A.I. plans.
Last month, SpaceX struck a deal with the A.I. start-up Anthropic to provide it with computing power for products that were not being used by Mr. Musk’s own A.I. services. SpaceX then forged a similar agreement last week to provide Google with computing power.
SpaceX boosters on Wall Street and social media promoted the deals as wins that would generate tens of billions of dollars in revenue. But naysayers pointed to how the company was making significant changes to its long-term business plans at the last minute.
“The real excitement should be about developing some new, powerful agentic model,” Mr. Chanos said. “But xAI seems to be suddenly changing its business model from developing models like Grok to basically becoming a neocloud,” he said, using the industry term for companies that provide computing power to other A.I. firms.
“That’s crucial because the entire valuation rests on xAI’s progress,” Mr. Chanos said, calling the neocloud strategy a “commodity business” that is valued far lower on the public markets.
Ultimately, SpaceX’s I.P.O. will be a litmus test of investors’ faith in Mr. Musk, Mr. Gerber said. Those willing to pay will do so because Mr. Musk, who previously transformed the car industry with his electric carmaker Tesla, is at the helm of a one-of-a-kind company in SpaceX.
“People are paying a trillion dollars for Elon,” Mr. Gerber said.
