SpaceX IPO raises concerns over European capital outflows and telecom competition

SpaceX’s planned initial public offering could pose significant challenges for the German and broader European economies, with concerns mounting over potential capital outflows and growing competitive pressure on Europe’s telecommunications sector.

The record-breaking IPO, scheduled for June 12, is expected to raise $75 billion and value the company at $1.75 trillion.

Unlike most previous US listings, the offering has been structured to give German and European retail investors particularly attractive access, raising concerns about a potential drain of capital from Europe.

At the same time, SpaceX subsidiary Starlink is emerging as a potential threat to the traditional terrestrial mobile communications market due to its low-latency satellite network.

That development could affect companies such as Deutsche Telekom and its subsidiary T-Mobile.

Fears of an “inflated valuation”

The financial data underpinning the record valuation, however, provide numerous reasons for skepticism.

Of SpaceX’s three current business segments — its rocket division, the Starlink satellite business and artificial intelligence company xAI, which also includes social media platform X — only the satellite business is profitable.

While SpaceX’s revenues are rising, so are its losses. In 2025, the company generated approximately $18.7 billion in revenue, up by one-third from the previous year, but also recorded losses approaching $5 billion.

In the first quarter of 2026 alone, the company posted roughly $4.7 billion in revenue while losses reached approximately $4.3 billion.

xAI created a significant drag on results, recording an operating loss of $2.47 billion.

As a result, a Danish pension fund blacklisted SpaceX, arguing that the company’s valuation was “generously inflated” and that pricing was being driven more by “Musk’s narratives than economic realities.”

SpaceX is tying much of its growth outlook to artificial intelligence, and its revenue projections depend heavily on technologies that have yet to be developed, including solar-powered data centres in space.

According to Reuters, the company is targeting a potential $28.5 trillion market in artificial intelligence.

Berenberg warns of capital flowing to the US

In a departure from the norm for US public offerings, participation by retail investors from Germany and across Europe has been made easier.

Berlin-based fintech company Trade Republic announced that European customers would be able to subscribe directly to SpaceX shares through its app.

That development threatens to create challenges for the European economy. Holger Schmieding, chief economist at Berenberg Bank, warned that capital is increasingly being drawn toward the United States.

“These enormous IPOs absorb capital through valuations heavily influenced by speculation. That makes it more difficult to finance investments in Europe,” Schmieding said.

At the same time, investors from China, including Hong Kong, have reportedly been barred from participating in the IPO for security-related reasons.

Because the United States applies regulatory and compliance restrictions to the export of critical technologies, lead underwriters were instructed not to accept orders from Chinese investors.

Starlink puts pressure on German telecom giants

Meanwhile, SpaceX’s recent global expansion, particularly in Europe, is creating uncertainty within the traditional communications industry, especially at Deutsche Telekom.

Satellite communications existed long before SpaceX and Starlink, but they faced a fundamental limitation: satellites typically orbited Earth at altitudes of around 35,000 kilometres.

At those distances, signals took relatively long to return to Earth. Latency could reach half a second or more, making video streaming and seamless internet browsing impractical.

Starlink fundamentally changed that model by deploying more than 10,000 satellites into low Earth orbit at altitudes of between 340 and 550 kilometres, reducing signal transmission times to around 20 milliseconds.

By comparison, modern 5G networks in Germany operated by Deutsche Telekom, Vodafone and Telefónica typically achieve latency of between 15 and 25 milliseconds.

Starlink has also received approval from the US Federal Communications Commission (FCC) to deploy an additional 15,000 satellites.

That has led many observers to believe SpaceX ultimately intends to become a mobile network operator itself and displace established providers.

German telecom companies see cooperation as the only option

Deutsche Telekom Chief Executive Timotheus Höttges said he views the development as a challenge for his company.

“I can certainly confirm that Starlink is a first-class technology company. If you cannot fight the dragon, ride the dragon,” he said.

Höttges intends to continue Telekom’s existing cooperation with Starlink as a network operator. The partnership is one of 35 Starlink collaborations currently spanning six continents.

The Deutsche Telekom chief executive hopes Starlink will never be able to replace terrestrial networks. However, market figures suggest SpaceX may ultimately be capable of much more than its leading European rival.

SpaceX is valued at $1.75 trillion, compared with an estimated $150 billion valuation for Deutsche Telekom and $209 billion for T-Mobile.

T-Mobile shares have already fallen by around 10%, with the stock declining from approximately $210 per share a year ago to around $190 today.

Starlink has meanwhile already submitted a bid for mobile spectrum in the United States. If the company secures a lasting position in the sector, T-Mobile’s growth prospects in the US could come under pressure.

That would directly increase risks for Deutsche Telekom, which derives roughly three-quarters of its market value from US operations.

Momentum builds behind a German Starlink rival

Efforts to establish a European competitor to Starlink are gathering pace.

As SpaceX prepares for its IPO, Germany’s Federal Cartel Office approved a planned satellite joint venture between defence and technology companies Rheinmetall and OHB.

The two companies intend to bid for a multibillion-euro Bundeswehr contract to build a military communications satellite network comparable to Starlink.

OHB will be responsible for satellite manufacturing and ground station deployment, while Rheinmetall will build the networks and produce end-user devices.

The Franco-German Airbus Group, which had initially competed against the Rheinmetall-OHB venture, will also be included in the project.

Although the new three-way alliance effectively removes competition and creates a monopoly structure, it allows the Bundeswehr project to move forward quickly and helps avoid potential legal disputes that could arise if the contract were awarded to a single bidder.

Musk says orbital data centres are not a difficult challenge

As SpaceX prepared for its major IPO this week, Chief Executive Elon Musk said on Monday that building artificial intelligence data centres in orbit was not a particularly difficult engineering challenge.

The billionaire entrepreneur said much of the required technology already exists within the current Starlink network.

“One of the things we want to convey here is that there is no kind of magic required that does not actually exist,” Musk said in a video interview released by the company.

“Most of this consists of technologies we have already developed for Starlink V3 satellites. We do not think this is a very difficult problem compared with what we are already doing.”

The remarks came as investors scrutinised SpaceX’s plans for orbital AI data centres.

Those plans form a key component of the company’s long-term growth strategy ahead of an IPO expected to value the company at approximately $1.75 trillion.

Plans unveiled for AI satellites

Musk and SpaceX engineer Ian Dahl outlined plans for solar-powered AI satellites designed to function as computing nodes in orbit and cooled through the dissipation of heat into space.

The company argues that moving computing infrastructure into orbit could help overcome some of the power constraints increasingly faced by terrestrial AI data centres.

According to the presentation, the first proposed AI satellite would generate roughly 150 kilowatts of peak power and provide 120 kilowatts of continuous computing capacity.

Musk said that was broadly comparable to a single Nvidia GB300 AI server rack, which typically consumes around 140 kilowatts at peak load.

SpaceX said the satellites would rely heavily on technologies already being introduced with next-generation Starlink V3 satellites, including solar panels and thermal management systems.

Musk said he expects SpaceX’s AI satellite factory in Bastrop, Texas, to achieve meaningful production volumes by the end of next year.

The orbital computing initiative forms part of a broader strategy aimed at positioning SpaceX not only as a launch and satellite communications company, but also as a major provider of artificial intelligence infrastructure as it enters the public markets.