By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
The panel is divided on SpaceX's IPO valuation, with concerns about high multiples, cash burn, and political risks, but also acknowledging potential long-term growth and strategic value.
Risk: Massive cash burn and political scrutiny of government contracts
Opportunity: Long-term growth potential from Starlink, Starship, and AI-infrastructure services
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
SpaceX will list shares on the Nasdaq Exchange later this month; it will be the largest initial public offering (IPO) in U.S. history.
SpaceX's initial price-to-sales ratio will be somewhere around 103, which is 40% higher than the most expensive stock in the S&P 500.
Since listing shares, the 10 largest U.S. IPO stocks on record has underperformed the S&P 500 by 127 percentage points.
SpaceX will make history later this month, when it becomes the largest initial public offering (IPO) by market value in U.S. history. The company reportedly plans to target a $2 trillion valuation. Previously, Meta Platforms was the largest U.S.-based IPO, with an initial market value of $81 billion.
SpaceX will trade on the Nasdaq Exchange under the ticker SPCX, and the company may list shares as early as June 12, according to Reuters. The IPO, likely to be a blockbuster event, is expected to draw particularly strong demand from retail investors, many of whom admire CEO Elon Musk.
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The market is so eager to own stock in the rocket and satellite company that the S&P 500 (SNPINDEX: ^GSPC) is considering rule changes that would fast-track SpaceX's inclusion in the index. But investors need to see two alarming statistics before purchasing shares.
SpaceX reportedly plans to go public with a market capitalization near $2 trillion, according to Bloomberg. The company reported $19.3 billion in sales over the past four quarters, which means its price-to-sales (P/S) ratio will be somewhere around 103, perhaps even higher if the stock pops on the first trading day.
That is an absurdly expensive valuation. For context, Palantir Technologies currently has the highest P/S ratio in the S&P 500 at 73. If SpaceX goes public at 103 times sales, it will immediately be about 40% more expensive than the most richly valued stock in the index. A premium of that magnitude is unsustainable.
I reviewed more than 100 of the most popular technology stocks and identified only eight that had valuations above 100 times sales at any point in history. All of those stocks dropped sharply after achieving peak P/S ratios, with an average peak-to-trough decline of 75%. In other words, history says SpaceX could lose three-quarters of its value at some point in the future.
SpaceX will be the largest IPO in U.S. history by initial market value, and stocks that go public with large market values typically lag the S&P 500 over time. In fact, since listing shares, the 10 largest U.S. IPO stocks on record have underperformed the S&P 500 by an average of 127 percentage points, according to FactSet Research.
That doesn't mean investors should forget about SpaceX. Instead, they should wait for a better entry point. Uber was the second-largest IPO in U.S. history, behind Meta Platforms. The stock has underperformed the S&P 500 by 116 percentage points since the IPO in May 2019, but it has outperformed by 118 percentage points since May 2023.
The lesson? Investors who avoided Uber stock until it traded at a more attractive valuation have been well rewarded for their patience. SpaceX may be a similar story. Equity analyst Nicolas Owens at Morningstar recently wrote, "We think the company has been significantly overvalued and investors will have opportunities to buy the stock at more attractive levels after the IPO."
SpaceX has revolutionized the space industry by developing reusable rockets that reduce launch costs. In 2018, the company successfully landed its Falcon 9 booster on Earth after launching it into space, something no competitor had done at the time, though Blue Origin has since achieved the same feat.
SpaceX will further cement its leadership with Starship, the first spacecraft designed to be fully and rapidly reusable. It comprises two stages, a booster and the spacecraft, which return to the launch tower rather than landing elsewhere, enabling rapid turnaround times. SpaceX says Starship's reusability will lower the cost to reach orbit by 99% relative to the historical average.
"This dramatically lowers per-launch costs by minimizing hardware replacement expenses and spreading fixed production costs across repeated uses," according to the registration statement (S-1) filed with the SEC. "Space flight that historically cost billions per launch now costs of tens of millions, fundamentally reducing the cost of space access."
In total, SpaceX values its addressable market at $28.5 trillion. That figure consists of $360 billion from launch and mission services, $1.6 trillion from Starlink broadband internet and mobile services, and $26.5 trillion from artificial intelligence infrastructure services and enterprise applications. That leaves a long runway for future growth, so investors should keep SpaceX on their watchlists despite its absurd valuation.
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Trevor Jennewine has positions in Palantir Technologies. The Motley Fool has positions in and recommends FactSet Research Systems, Meta Platforms, Palantir Technologies, and Uber Technologies. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"A defensible multi-year path to profitability exists as Starlink and Starship mature, which could justify a higher multiple and eventual re-rating from speculative levels."
SpaceX's IPO headlines fear a perpetual 103x sales multiple, but the market may be underestimating the path to profitability if Starlink, Starship, and AI‑infrastructure services scale. Even with a $2 trillion market cap, growth could justify a re-rating if the company converts revenue growth into sustained cash flow, aided by cheaper launch costs from reusability and expanding addressable markets. The risk is real—massive cash burn, reliance on Musk’s leadership, regulatory headwinds, and execution risk. But if early Starlink monetization hits higher ARPU, and Starship becomes a true cost leader for launches, a multi-year path to profitability could support a premium multiple.
Strongest counterargument: the thesis rests on Starlink monetization and Starship ramping on schedule, which may not materialize at scale. If execution slips or costs stay high, the 2T valuation could stay a mirage for years and the stock could trade at a prohibitively expensive multiple.
"The article relies on unverified IPO rumors and misapplies traditional valuation multiples to a company that operates more like a vertically integrated infrastructure utility than a standard manufacturer."
The article’s premise is built on a massive factual error: SpaceX has not announced an IPO, nor is there a confirmed 'SPCX' ticker. Treating a $2 trillion valuation as a settled fact is speculative at best. Even if we ignore the factual inaccuracies, the P/S ratio argument is flawed because it treats SpaceX as a traditional aerospace manufacturer rather than a dual-sided platform play. Starlink’s recurring revenue model and the potential for orbital infrastructure to serve as the backbone for future AI compute clusters justify a premium that standard valuation metrics fail to capture. Investors should focus on the delta between launch costs and Starlink’s ARPU, not just historical IPO performance.
The sheer scale of capital required for Starship development means that any delay in launch cadence could lead to a massive liquidity crunch, turning that 'premium' valuation into a liability overnight.
"The valuation is indefensible today, but the article's evidence that it *must* crash is weaker than it appears—historical comps are poorly specified, and Starship's economics, if realized, could justify a re-rating that makes current holders rich despite the IPO pop."
This article conflates valuation extremity with inevitable underperformance—a logical trap. Yes, 103x P/S is absurd by historical standards. Yes, mega-IPOs lag. But the article cherry-picks: it cites 8 stocks above 100x P/S that crashed 75% on average, yet doesn't disclose their names, timeframes, or whether they were actually comparable (SaaS recurring revenue vs. aerospace?). The 127-point underperformance of the 10 largest IPOs is real but backward-looking—includes Alibaba (2014), which faced Chinese regulatory headwinds unrelated to valuation. SpaceX's $28.5T TAM claim is fantasy-math, but Starship's reusable economics, if they work, genuinely alter the cost curve. The article says 'keep on watchlist'—which is just 'wait'—but doesn't price in the optionality: if Starship succeeds and captures even 5% of satellite/launch market, current valuation becomes cheap within 5 years.
SpaceX's addressable market is largely speculative (AI infrastructure services?), and Starship is still unproven at scale; the article's own historical precedent—mega-IPOs underperforming by 127 points—is a powerful empirical signal that shouldn't be dismissed as mere timing noise.
"103x sales at debut leaves no room for the multi-year delays typical of Starship scaling."
SpaceX's planned $2T valuation at ~103x trailing sales on $19.3B revenue exceeds Palantir's 73x peak in the S&P 500 by 40%, a premium historically followed by 75% average drawdowns in eight comparable tech names. Combined with the 127pp underperformance of the ten largest prior U.S. IPOs, the setup favors waiting for post-listing compression rather than chasing the June 12 debut under ticker SPCX.
Starship's 99% launch-cost reduction and Starlink's path to the $1.6T broadband slice could compress unit economics faster than any prior aerospace or software precedent, allowing multiples to remain elevated even if near-term revenue misses occur.
"The 2T valuation hinges on unproven cash-flow milestones; execution delays or higher burn could drive a rapid re-rating, making post-IPO compression unlikely."
Grok argues post-listing compression and high multiples can persist thanks to Starship/Starlink optionality. My counter: that thesis banks on unproven near-term cash flow and enormous capex; any delay or cost overrun increases burn and triggers a rapid re-rating, especially with a potentially tiny float after IPO. The optionality may never monetize, so the 2T/103x setup risks a sharp downside surprise.
"SpaceX's role as a critical national security asset provides a valuation floor that standard P/S metrics and historical IPO comparisons ignore."
Grok and Claude are missing the geopolitical premium. SpaceX isn't just a tech stock; it's a critical national security asset. The US government is effectively an anchor tenant, ensuring floor demand regardless of commercial ARPU or P/S ratios. While the 103x multiple is historically precarious, the 'sovereign-grade' nature of their launch capability creates a valuation floor that traditional SaaS comparisons fail to account for. This isn't just about revenue; it's about orbital dominance.
"Government anchor tenancy stabilizes revenue but doesn't justify a 103x multiple under political pressure."
Gemini's 'sovereign-grade floor' argument conflates government anchor tenancy with valuation support—a dangerous leap. Yes, USAF contracts provide revenue stability, but government contracts are notoriously price-sensitive and subject to Congressional scrutiny. A $2T valuation on $19.3B revenue invites political backlash ('corporate welfare'), potentially triggering contract renegotiation or reduced volumes. Government demand ≠ premium multiple. The geopolitical moat protects *revenue*, not *multiple*.
"Political backlash from the extreme valuation threatens contract stability more than Gemini acknowledges."
Gemini's sovereign-grade floor thesis falters because a $2T valuation on $19.3B revenue would intensify congressional scrutiny of USAF and NASA contracts, inviting renegotiation or forced competition rather than protecting margins. Unlike smaller defense contractors, this scale risks antitrust or subsidy probes that accelerate multiple compression post-IPO. The anchor-tenant demand stabilizes revenue but not the 103x P/S premium amid those political risks.
The panel is divided on SpaceX's IPO valuation, with concerns about high multiples, cash burn, and political risks, but also acknowledging potential long-term growth and strategic value.
Long-term growth potential from Starlink, Starship, and AI-infrastructure services
Massive cash burn and political scrutiny of government contracts