SpaceX’s upgraded Starship launch on Friday delivered enough progress to reinforce investor confidence ahead of Elon Musk’s planned $1.75 trillion IPO, even though the test also highlighted that achieving full rocket reusability remains an unfinished challenge.
Starship plays a central role in SpaceX’s long-term strategy to reduce launch costs, expand its Starlink satellite network — currently the company’s main revenue generator — and support future ambitions including orbital AI data centers, space-based computing infrastructure and crewed missions to the Moon and potentially Mars.
“SpaceX did not need perfection from this Starship flight. It needed proof that the upgraded vehicle is moving in the right direction, and that is largely what investors saw,” said Mark Vena, CEO at SmartTech Research.
SpaceX has already invested more than $15 billion into the development of Starship, which the company hopes will eventually become a fully reusable launch system capable of transporting payloads far larger than existing rockets.
Friday’s mission marked the 12th Starship prototype test flight since 2023 and the first involving the new V3 version of the vehicle. The launch achieved several important objectives, including the deployment of mock satellites and a controlled splashdown of the spacecraft in the Indian Ocean. However, the Super Heavy booster failed to complete a controlled landing and instead crashed into the Gulf of Mexico.
According to Vena, even a partially successful test can strengthen the investment narrative if it demonstrates visible progress toward reliable full reusability.
Investors, analysts and fund managers remain broadly optimistic about the IPO, betting that Musk’s track record of transforming high-risk engineering projects into dominant businesses will continue with SpaceX.
“Full reusability is the key to unlocking dramatically lower launch costs,” said James Bruegger, chief investment officer at British investment firm Seraphim Space. “That’s where the real value lies.”
SpaceX itself has cautioned that delays in Starship development or failure to meet cost targets could slow deployment of next-generation satellites and AI infrastructure projects by increasing operational expenses. Some investors continue to worry that Starship could become trapped in a cycle of repeated technical fixes and new failures without ever fully proving a scalable end-to-end system.
“What we saw with the Starship launch is that it reduced the bear case risk that the Starship is stuck in a failure loop. So it doesn’t completely eliminate the execution risk,” said Jesse Nacht, a research associate at MarketVector Indexes. “Unless something were seriously catastrophic, I don’t think it would change expectations all too much.”
Analysts Describe Test Outcome as a “Lukewarm Success”
Antoine Grenier, partner and head of space consulting at Analysys Mason, described the outcome as a “lukewarm success,” arguing that it may actually have been the most favourable result for SpaceX ahead of its public offering.
“Total failure would have been problematic, total success would have triggered enormous IPO excitement,” he said.
Grenier added that the seven-month gap since the previous Starship test meant SpaceX needed to complete another launch before moving ahead with the IPO process, because avoiding a new test “would have raised more questions” among investors about the company’s execution capabilities.
A roadshow for the highly anticipated IPO is scheduled to begin on June 4. If successful, the offering could raise as much as $80 billion, potentially making it the largest IPO ever completed.
Investors are increasingly viewing SpaceX not only as a launch and satellite business, but also as a future provider of AI infrastructure.
Elon Musk defended the trajectory of xAI on Tuesday, stressing that the three-year-old company remains at an early stage compared with competitors such as OpenAI and Anthropic, while promising that its models “will be great.”
For now, analysts believe SpaceX still faces substantial work before proving that Starship can operate economically and reliably at large scale.
“Obviously, SpaceX will need to demonstrate a successful launch, payload deployment, orbits and touchdown of the booster and the vehicle in order to enable deployment of the system at scale to construct a megaconstellation of orbital data centers,” said Austin Moeller, managing director of equity research at Canaccord Genuity.