My Thoughts on the SpaceX IPO
I don't normally do this but in light of the recent inquiries I've received from clients and friends regarding the IPO, I thought it would be beneficial to post my high level thoughts.
At its core, an investment in SpaceX is a bet on Elon Musk. That has historically been a profitable bet, and there’s little evidence to suggest his ability to execute has diminished.
However, the valuation requires some scrutiny. At the IPO price, SpaceX is trading at approximately 94x trailing revenue, implying investors are paying about $94 for every $1 of revenue. Even under highly unrealistic assumptions—such as distributing 100% of revenue—it would take decades to recoup the initial investment.
To justify the current valuation through growth alone, SpaceX would need to compound revenue at roughly 57% annually over the next decade, assuming no profitability. While not impossible, it’s a very high bar.
We all know investors aren't buying SpaceX for near-term profitability or dividends…they’re buying a growth story. Relative to peers, the valuation is not unprecedented: AST SpaceMobile trades at ~409x sales and Rocket Lab at ~123x. However, SpaceX remains deeply unprofitable, with a net loss of approximately $5 billion in 2025 and $4.28 billion in Q1 2026.
Recent pricing also reflects strong forward expectations. In December 2025, shares were sold privately at roughly $84 (post-split), compared to a $135 IPO price, a 61% increase in six months. A significant portion of future growth appears to already be embedded in the offering price.
Remember, forecasting that growth is inherently uncertain. Investment banks underwriting the IPO are incentivized to present favorable projections. Long-term forecasts, particularly those extending 10–15 years, are notoriously unreliable.
From an investment perspective, future returns will be driven by two factors:
1. Fundamental growth: revenue, earnings, and cash flow. SpaceX currently lacks profitability, so returns will depend heavily on future revenue expansion and the timeline to positive cash flow.
2. Multiple expansion: changes in valuation driven by macro conditions such as liquidity, interest rates, and risk appetite. While the current environment appears to be supportive, it may not be as accommodative as prior periods of peak multiple expansion.
Time horizon is therefore key. Investors must be willing to hold through extended periods of uncertainty and potentially wait five to ten years for fundamentals to align with valuation.
In the end, SpaceX represents a high-quality but high-expectation asset. The long-term opportunity is substantial, but so is the execution risk and valuation sensitivity. While Elon’s vision remains a powerful driver, sustained stock performance will ultimately require progress toward profitability and a supportive macro backdrop for high-growth valuations.
P.S. As Dave Nadig recently noted on At the Money, large IPOs often function as liquidity events for insiders and early investors. Public investors should be aware they may be providing that exit.