SpaceX Bets a Billion on Fossil Fuels Despite Solar Energy Claims

The Renewable Energy Paradox

Elon Musk‘s name has become practically synonymous with renewable energy. The tech titan and CEO of both Tesla and Space Exploration Technologies, or SpaceX, rode a wave of concern about vehicle emissions to create the first viable U.S. electric car company. He grew that venture into a global automotive superpower and one of the world’s largest companies. In 2016, Tesla bought solar company SolarCity and introduced solar roof technology that replaced traditional roof shingles with small solar tiles.

So why is Musk, of all people, making a quiet billion-dollar investment in fossil fuels on behalf of SpaceX? The contradiction raises significant questions for investors who believed they were backing a company committed to sustainable energy solutions. The answer lies in the stark gap between SpaceX’s public messaging and its operational realities.

What the Prospectus Reveals

SpaceX’s S-1 prospectus-the company information shared with the public just before its IPO-doesn’t mince words when discussing solar energy. “The Sun contains approximately 99.8% of the solar system’s energy and, as a result, we believe it is the only truly scalable solution to terrestrial energy constraints in the age of AI,” the prospectus declares. The document repeats this assertion five more times, emphasizing the company’s apparent commitment to solar power.

However, the company doesn’t seem interested in harnessing solar energy anywhere but in outer space. Its giant Colossus II data center on the Tennessee/Mississippi border operates on natural gas power for the foreseeable future. SpaceX’s prospectus notes that it significantly relies on natural gas and gas turbine technology to power data center operations.

“As such, our ability to scale our infrastructure depends in part on our continued access to natural gas supply at economically feasible prices [and] the availability of gas turbines and related equipment,” the prospectus continues. This admission reveals a fundamental dependency on fossil fuel infrastructure that directly contradicts the company’s solar energy rhetoric.

The Billion-Dollar Acquisition Strategy

SpaceX’s ongoing reliance on natural gas power explains why the company would want to secure its own supply infrastructure. Owning power infrastructure minimizes potential supply disruptions or rate hikes, providing operational stability and cost control. However, SpaceX’s recent billion-dollar acquisition of an energy company signals an even deeper commitment to fossil fuels than previously understood.

The acquisition involves a company that operates a fleet of small gas turbines and diesel engines mounted on trailers. Because these are small, mobile units, they can often be installed within days without the lengthy siting and permitting process required for a permanent power plant. SpaceX classifies these as temporary power solutions, suggesting flexibility in deployment across various operational sites.

Market Performance and Wild Predictions

Space Exploration Technologies set a stock market record with its initial public offering on June 12. The company raised $75 billion and began with an initial valuation of $1.77 trillion. The stock launched at $135 but then dropped over 28% from its June 16 high due to market turbulence.

The average investor couldn’t invest at SpaceX’s IPO price, so many now sit in the red. Despite SpaceX’s rough start since its IPO, Wall Street analysts have issued wildly divergent predictions. Financial institution Raymond James’ Brian Gesuale set the bar extremely high for SpaceX, establishing his target price at $800.

The Math Behind the Hype

At the end of trading on July 10, SpaceX’s price stood just over $145. To hit Gesuale’s $800 target, the stock would need to increase by 452%. SpaceX’s market cap currently stands at $1.9 trillion, so reaching the $800 mark would value the company at $10.5 trillion-more than double the market cap of the world’s most valuable public company, Nvidia at $5.1 trillion.

Gesuale didn’t specify when SpaceX would hit $800, but the timeline matters significantly. SpaceX would need to produce approximately 77% average annual returns over three years, 41% over five years, or 19% over ten years to reach that target. Given the historical performance of mega IPOs-where most underperform the market in the first few years-the shorter timelines appear highly improbable.

Another Bullish Forecast Emerges

John Godyn of Citigroup issued an even more aggressive bull case, forecasting SpaceX stock could trade at $900 per share. With a $5,000 investment at today’s prices, that could provide substantial returns. However, Godyn cautions it will take considerable time for the company to reach that valuation, if it does at all. His near-term price target stands at $200 for the 12-to-18-month window.

“Starship will establish the most affordable and scalable path to unlocking the economic potential of space,” Godyn said in a note seen by Barron’s.

Starship, which consists of a spacecraft and a reusable rocket booster, represents SpaceX’s largest craft to date. Engineers designed it to cut the cost of reaching low Earth orbit by up to 90% compared to its Falcon 9 rocket. Eventually, Starship will have the capability to carry up to 100 people on long-duration flights, enable satellite delivery, and support the development of a base on the Moon.

The Space Data Center Vision

As the cost of putting payloads into space declines, SpaceX’s vision of a constellation of satellites serving as artificial intelligence data centers can begin to take shape. The company touts solar power as the only truly scalable solution for energy constraints. However, it relies heavily on natural gas to power its current operations. This contradiction between messaging and operational reality remains one of the company’s most glaring inconsistencies.

Since SpaceX started out with such a high valuation, its upside may be much more limited than an $800 or $900 price target would suggest. Right now, much of SpaceX’s movements appear fueled by hype and speculation rather than fundamental investing. The company’s most ambitious promises, such as data centers in space, are not expected soon. Realistically, they remain at least a decade away from becoming feasible, according to industry analysts.

Investment Implications

Nobody can predict exactly how the stock will perform, and SpaceX could very well reach these astronomical price targets. However, investors should carefully consider the disconnect between the company’s renewable energy rhetoric and its fossil fuel infrastructure investments. Since June 12, SpaceX has traded within a range of $137 to $226, showing significant volatility for such a massive company.

For investors contemplating a position in SpaceX, the energy contradiction poses fundamental questions about the company’s long-term strategic direction. The company champions solar power in its prospectus yet commits billions to natural gas infrastructure on the ground. This duality may represent pragmatic business planning, or it may signal a deeper conflict between Musk’s public image as a renewable energy champion and the practical realities of running energy-intensive operations. Time will reveal which narrative proves more accurate.