SpaceX’s Expected IPO Has Huge Hype, but Recent Mega-Listings Warn Investors to Be Careful
Reuters’ analysis of the 50 highest-valued IPOs over the past five years found that investors would have been better off buying an S&P 500 index fund about three-quarters of the time. The same analysis found that those IPOs gained an average of 27% through May 21, compared with an average S&P 500 gain of 53% over comparable periods. That is the uncomfortable reality behind the SpaceX excitement: a famous company, a huge addressable market, and a strong brand do not automatically translate into superior stock returns for investors buying at the public listing.
SpaceX is not a normal IPO candidate. Reuters reported that the company could target a $1.75 trillion valuation, which would eclipse Saudi Aramco’s 2019 offering valuation and make SpaceX one of the world’s most valuable publicly traded companies immediately. The company is expected to list as early as June 12, with a share sale potentially as early as June 11, and its debut could be followed by OpenAI and Anthropic as investor demand for AI-related companies remains extremely strong. The issue is that at this valuation, SpaceX would trade at nearly 100 times sales, compared with Nvidia’s price-to-sales ratio of 24, according to Reuters.
The financials are impressive in scale but not clean. SpaceX generated $4.69 billion in revenue in the first quarter, but posted a total operating loss of $1.94 billion. Starlink, its satellite internet unit, produced $1.19 billion in operating profit and remains the strongest proof point in the business. However, the AI division recorded $2.47 billion in losses on $818 million in revenue, and the acquisition of xAI accounted for 76% of SpaceX’s $10.1 billion in first-quarter capital spending. This means investors are not just buying a rocket and satellite company; they are buying Musk’s broader bet on AI, space-based data centers, and markets that are still largely unproven.
Governance is another serious issue. Reuters reported that Musk will retain 85.1% of combined voting power, while SpaceX will use a dual-class share structure where Class B shares carry 10 votes each and Class A shares sold to public investors carry one vote each. The prospectus also includes provisions limiting shareholder rights, including arbitration requirements and restrictions on where legal claims can be filed. For retail investors, this means buying SpaceX would likely mean accepting minimal influence over management decisions, even if the company faces major losses, execution setbacks, or governance controversies.
The bull case is still powerful. SpaceX has changed the economics of space through reusable rockets, built the world’s largest satellite network through Starlink, and created a business that has few direct public-market comparables. It also plans to earmark a significant portion of shares for retail investors and is expected to list on Nasdaq and Nasdaq Texas, with Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, and J.P. Morgan as bookrunners. But the honest conclusion is this: SpaceX may become a historic public company, yet that does not mean the IPO price will be attractive. The biggest winners in mega-IPOs are often those who invested before the listing, while public buyers are left paying for the story after much of the optimism has already been priced in.
