SpaceX will conduct the largest IPO in history this month, with a valuation expected to be around 1.8 trillion dollars, which would instantly place it among the world’s largest companies. The hype surrounding this event is everywhere; I’ve seen countless ads online debating whether you should invest.
So the question is: should you invest in SpaceX’s IPO? Or should you wait and see whether this 'rocket' will soar into the sky or blow up completely?
After carefully analyzing the data and comparing similar events from the past few decades, I found a result that may surprise you——**whether or not you directly buy SpaceX’s IPO, many people may already have become investors in it without realizing it**.
Based on the information we have so far, SpaceX (the rocket company founded by Elon Musk in 2002) plans to go public on June 12. Since its founding, the company has expanded into multiple businesses, including the satellite internet company Starlink. More recently, the company also acquired xAI from Musk himself, including the former Twitter (now X) and the chatbot Grok.
This makes SpaceX a very complex company. It is made up of multiple different parts, spans three different industries, and is difficult for investors to value accurately.
If we only look at the numbers in the filings they submitted to the SEC, we see this: the company has three business lines, and only one of them was profitable for the full year of 2025. Basically, only the **Starlink** business is supporting the entire company and generating profits.
Starlink is the business you may have seen—through satellites orbiting the Earth, you can buy a small receiver and access the internet from almost anywhere. SpaceX was not the first company to do satellite broadband, but it was the first to scale quickly and achieve low latency. This is mainly thanks to its fully vertically integrated model: it makes its own satellites and owns reusable rockets.
The other business lines clearly dragged down overall performance, especially xAI, which lost more than 60 billion dollars last year due to massive investments in AI data centers, while revenue was only just over 3 billion dollars. To date, SpaceX’s cumulative losses have exceeded 41 billion dollars.
So you’re looking at a company made up of multiple parts: only one business line is currently profitable, the other two are losing money, and losses are expected to widen further in the future.
This brings us to the most important question in the video:**How do you value a company like this?**
Why can a company with such low revenue be valued at nearly 2 trillion dollars? To give you a sense of scale, I’ll show you some well-known US and UK companies with annual revenue similar to SpaceX and see what valuations the stock market gives them.
Here are examples of some well-known American companies (sorted by similar annual revenue), and on the right is their current market capitalization. Compared with SpaceX’s upcoming IPO valuation, these numbers are astronomical—completely on a different level.
For a tech example: Airbnb’s revenue in its most recent fiscal year was about 12 billion dollars, and its current market cap is about 85 billion dollars. It has a gross margin of over 80%, generates billions in profit, and is the global leader in short-term rentals.
I know these companies have different businesses, but I want to give you a reference point.
Let’s also look at some well-known UK companies: Rolls-Royce, Diageo, Sainsbury’s, and others, with last year’s revenue and market caps shown below. Because SpaceX’s potential scale is so large, the chart on the right uses a**logarithmic scale**. If we switch to a linear scale (looking only at market cap and ignoring revenue), you’ll find the gap is even more dramatic.
If that still isn’t convincing enough, let’s look at the ranking of all companies in the S&P 500 by**price-to-sales ratio (Price to Sales Ratio)**. The higher the price-to-sales ratio, the more “expensive” a company is. For example, a price-to-sales ratio of 10 means investors pay 10 dollars for every 1 dollar of revenue (note: revenue, not profit).
Right now, the highest price-to-sales ratio in the S&P 500 is Palantir (about 65), followed by CrowdStrike (about 39). NVIDIA , as one of the world’s largest companies, has a price-to-sales ratio of about 20. If SpaceX went public with its current financials, its price-to-sales ratio would be**95**—no company can compare with that.
The reason valuation is so difficult is that there are no comparable companies right now. No one is actually doing space mining, and no other company has reached a similar scale in rocket manufacturing. When SpaceX talks about its potential total addressable market (TAM), it focuses on enterprise applications, and that alone is as high as 20 trillion dollars.
For comparison, look at the TAMs of some major global industries: construction, food and beverage, healthcare, automobiles, and so on. Even if you add global healthcare, food and beverage, and the entire automobile industry together, they still don’t come close to the TAM SpaceX claims for a single enterprise application segment.
Of course, enterprise applications could be worth that much money, but the problem is:**SpaceX has not generated any revenue in this area yet**—it is entirely a promise about the future.
But isn’t that the essence of the stock market? Trying to predict a company’s future value—an entirely unknown future.
A recent analyst report from Morningstar argues that SpaceX is severely overvalued, with a fair value of about half of what they are asking for (around 780 billion dollars). They say investors may have the chance to buy after the IPO at a more attractive price.
Looking back at the performance of some of the largest IPO s in history may give us some insight. Below is a list of the biggest IPO s ever (inflation-adjusted), and SpaceX’s scale is unprecedented (second only to Saudi Aramco).
So,**should you buy SpaceX at the IPO?**
Data from academic researcher Jay Ritter shows that IPO stocks usually rise on the first day, with an average first-day gain of about 30% since 2020. But in the long run, the picture is completely different.
Over the past 40 + years, IPO companies have underperformed already-listed companies in the same industry by an average of 27 percentage points three years later. Whether you look at 1 year, 3 years, or 5 years, buying IPO companies has on average been worse than simply buying a broad market index fund.
Almost every IPO company eventually offers a lower-priced entry point. Great companies like Amazon, Meta, and Microsoft have all had multiple sharp pullbacks, and Peter Lynch also emphasized in One Up on Wall Street:**good companies will give you many chances to buy; there is no need to rush in at the IPO**.
Assume you decide not to buy at the IPO; you may think you can avoid SpaceX, but the reality may not be that simple.
The Nasdaq exchange is rapidly adding SpaceX to its indices (including the Nasdaq Composite and the Nasdaq 100). Although the S&P 500 decided not to give it a fast track (it must have been listed for 12 months and be profitable), many of the index funds you hold—especially global index funds—will soon indirectly own shares of SpaceX.
SpaceX has released only about 5% of its shares to the market, which causes index funds to adjust their weighting calculations. Even so, a large amount of passive capital will still flow in.
In addition, even without majority ownership, Musk will have more than 80% of the voting power, meaning the company is effectively controlled entirely by one person. This is also extremely rare among large technology companies.
**My personal conclusion:**
This doesn’t fit my investing style. I usually follow a passive investing strategy, regularly buying broad market index funds (through tax-advantaged accounts like ISAs and pensions). Whether I like it or not, I will soon indirectly own SpaceX through index funds.
But if I were actively picking individual stocks, I**would not** buy SpaceX at the IPO.
I explained the reasons in the video in detail: the valuation is too high, most of the business is currently losing money, it depends on a huge market that has not yet materialized, and Elon Musk’s storytelling ability is strong but the execution is uncertain (for example, Tesla’s full self-driving promise has been around for ten years).
This looks more like speculation than investing. Traders may like its volatility, but ordinary investors can easily be swept away by FOMO (fear of missing out).
Investment banks, employees, and early investors all have an incentive to push the valuation higher, and their interests may not necessarily align with yours.
You can make your own decision based on your situation; I am not a financial advisor. But personally, I would choose to**wait and see** and closely watch the market performance afterward.
Feel free to tell me what you think in the comments.
See you in the next video, and happy investing!
