Elon Musk says SpaceX could be 'worth orders of magnitude more than the current Earth economy' — can that really happen?

Trading at $162 per share with a $2.21 trillion market cap in early October, the aerospace manufacturing and exploration company’s recent financial gains have once again boosted Musk’s personal wealth valued at just over $1.02 trillion.

Musk’s stake in SpaceX is massive. He holds a $48.4% equity position in the company, represented by 6.42 billion shares of SPCX stock and stock options, a recent SEC filing noted. SpaceX shares are up 48% over the past three months, easily beating the S&P 500, which returned 3.12% over the same timeframe.

SpaceX’s chances of passing the earth’s economy are remote

While SpaceX has opened many eyes on Wall Street, suggesting that the company, even if it grows by leaps and bounds, is no match for the global economy.

Take the S&P 500. The total economic value alone tops $70 trillion, while the worldwide economy stands at upwards of $126 trillion in nominal gross domestic product (GDP), and over $219 trillion in purchasing power parity.

That’s a long way to go for a single enterprise, especially one that’s only gone public five months ago.

“As a founder, it’s common to evaluate a company at three times or even 10 times if you’re popular,” Calvin Brown, founder of business scaling-services company SweetGum.ai, told Moneywise. “Outsized valuations aren’t based on any formula, but on what the market doesn’t push back on.”

For scientific reasons, neither Musk nor his companies will go to Mars, making any discussion of valuation premature.

“For example, self-driving cars haven’t fully fulfilled their promise, which I think is a lower bar to clear,” Brown noted.

Other economic mavens say the only hope for a SpaceX takeover is an emerging economy.

“Musk’s use of the phrase ‘Orders of magnitude more than the Earth economy’ implies a valuation well above $1,000 trillion,” Shammi Thakur, Research Director at Vyansa Intelligence, told Moneywise. “A valuation is the present value of future profits, so SpaceX would need to earn more than today’s entire global economy and sustain it.”

That is only conceivable if a new economy emerges, rather than SpaceX winning share in existing markets, he said.

Thakur added that, as a financial forecast, “it defies conventional mathematics,” even if it works as a “thought experiment about a different kind of economy.” It’s simply “not testable on any investable timeline,” he continued.

Mining and space transport should help SpaceX grow

Another question is which potential revenue streams could realistically propel SpaceX into the ranks of the world’s most valuable companies, let alone make it the world’s king? For SpaceX, that likely means mining, space-based artificial intelligence infrastructure, interplanetary transportation or extraterrestrial manufacturing.

But could those channels combined ever generate the tens of trillions of dollars needed to meet Musk’s prediction? Not likely, Brown said.