The Breakdown: SpaceX
Inside SpaceX: From a bankrupt startup to the future of the space economy.
The largest IPO in history is about to take place. And it’s not just one company going public; it’s multiple projects rolled together all being led by one of the greatest entrepreneurs of our time. SpaceX, the company using first principles to get us to Mars while bringing service through Starlink to the most remote places on Earth, merged with xAI, the company behind one of the leading artificial intelligence models that is a competitor to OpenAI and Anthropic. Investing in SpaceX is investing in Elon Musk, his vision for the future and the unique combination of Space and AI.
In 2020, SpaceX was only pulling in $1.6 billion in revenue. By 2025, revenue had jumped to over $15.5 billion, growing revenue by nearly 1,000% in five years. This mirrors the explosive growth trajectory seen from Tesla, that grew revenue by 1050% between 2013 and 2018. It is also significantly faster than Palantir, that grew revenue from $1.1 billion in 2020 to $3.5 billion in 2025.
By way of a roadmap, this report describes the history of the company and how it was transformed from bankruptcy into the leader in its industry. It then details the competition and addresses the Musk factor and how that should affect our view on SpaceX. We will then strip down and understand the valuation, red flags, and finally I will give overall thoughts on the company. By the end of this piece, you will have a clear understanding of SpaceX, the tailwinds and bear cases, tradeoffs and all the important information required for those considering investing in the largest private company ever.
SpaceX’s current valuation of $1.75 trillion will likely immediately launch it into one of the ten biggest companies in the world, significantly larger than other Mag7 giants like Meta and Tesla. Their rapid growth and unlimited ceiling (pun intended) have caught the attention of not just investors but some of the biggest companies in the world as well. Nvidia, Google and Broadcom have all made significant investments into SpaceX. And they aren’t the only ones; just a few days ago Anthropic announced a massive partnership with SpaceX leasing the entire Colossus supercomputer for billions of dollars a year of recurring revenue1. This deal has shifted SpaceX into an AI cloud infrastructure provider.
Despite all this, critics of SpaceX are saying that the valuation is way too high. They find it impossible to believe that a company that reported a net loss in 2025 could possibly be one of the most valuable companies in the world. Starlink, SpaceX’s crown jewel and cash generating machine, generated only $11.4 billion in revenue in 2025, less than a third of the revenue of AT&T in one quarter, a company worth $175 billion, 10% of SpaceX’s estimated IPO.
The Birth of SpaceX:
SpaceX wasn’t always a trillion-dollar company. The story truly begins in the 1960s. During the height of the cold war, the US and the USSR were fighting on almost every front. Including space. The US was spending aggressively and dedicating their best resources to the space race, allocating over 4% of the federal budget at its peak2. The race to the moon ended on July 20th, 1969, when Neil Armstrong became the first human to ever step foot on the moon. And then, for some reason, the space race seemed to end there. Instead of building on the success of landing a human on the moon, NASA stopped trying to expand their mission. US funding was slashed, with NASA’s federal allocation dropping below 1% in 1971, a number it has remained below ever since3. By 2001, the US was spending $14.25 billion less than half of the $32.34 billion 1966 budget4.
Into this vacuum stepped Elon Musk. Born in 1971, Elon Musk had grown up in the decades following humans stepping foot on the moon yet for the first three decades of his life, no human came close to that same feat. In 2001, frustrated by that lack of progress Musk decided to start looking into furthering space exploration. In 2001, he tried to buy a Russian intercontinental ballistic missile in order to use as a prototype to send to Mars. Musk couldn’t pay the price the Russians wanted, and he was famously laughed out of the room by the Russian officials. Instead, he decided to build it himself.
After the meeting, Musk decided to do the math himself. He found that when building a rocket, only 3% of rocket costs were actually the raw materials. He realized that building a rocket himself would be a fraction of the cost.
And so, in 2002 Musk spent $100 million of his own money to hire some of the most talented engineers in the world. With some of the top talent hired as the cornerstones of his organization, Musk then decided to fill out the rest of his team on a budget, calling top universities like MIT and Stanford to ask department heads for the top students5.
I think it’s important to reason from first principles rather than by analogy. You boil things down to the most fundamental truths and say, ‘What are we sure is true?’ … and then reason up from there.”
Elon Musk - Founder of SpaceX
Due to the budget constraints of SpaceX, Musk and his team decided to build everything from first principles. This approach came after they tried to buy a space radio and were quoted a price tag of $100,000. Instead, they built it themselves. The cost, $50006. They continued improvising and thinking outside the box, realizing that it would be cheaper to build the rocket vertically than horizontally. This approach would be fundamental to the way SpaceX operates until today.
In 2006, five years after meeting with the Russian space team, SpaceX launched its first rocket, the Falcon 1. Unfortunately, it failed, as did the second attempt, and the third in 2008. At that point, SpaceX was weeks away from bankruptcy and dangerously close to becoming a failed experiment.
In a final Hail Mary to save the company, in 2008, Musk and his team launched flight 4. The flight worked, and Musk and his team became the first private company to launch a rocket into orbit. A few months later, NASA signed a $1.6 billion contract, providing the capital needed in order to survive.
Over the next decade, SpaceX experimented, built and innovated until in 2015 they reached a major milestone, launching and landing a booster back on Earth7. This success proved that their business model worked and that rockets don’t have to be single-use. In the same year, Musk announced Starlink, what would become SpaceX’s cash generating machine years into the future. Then in 2020, they launched their first private flight bringing humans to orbit for the first time. Today, a quarter century after it was founded, SpaceX accounts for almost 90% of spacecraft launched worldwide and is likely the company pulling off the greatest modern engineering feat.
What does SpaceX do?
SpaceX is the company leading the charge to utilize space and expand human life outside of just Earth. But how exactly does that break down?
“SpaceX’s ultimate goal is to make life multi-planetary, with a focus on enabling humans to live on Mars, while revolutionizing space technology and reducing the cost of space access.”
Elon Musk at SpaceX founding, 2002.
SpaceX was originally founded by Musk in 2002 with two initial goals.
Taking humans to Mars and establishing a colony outside of Earth.
Expanding and improving space technology with the goal of simultaneously reducing space costs.
In essence, SpaceX is trying to become space infrastructure for a new space economy. And so far, they have succeeded. Investing in SpaceX is, by extension, investing in a belief that space will become more utilized tomorrow than it is today.
As mentioned previously, the vast majority of anything going into space today whether it is people, satellites, or equipment is done by SpaceX. And that’s not by chance. Rebuilding everything in house helped SpaceX not only in its early days, but it has also led to significantly cheaper costs than other competitors today.
Currently, SpaceX is split into a few different business branches.
Starlink:
Starlink is SpaceX’s giant web of thousands of satellites in space that provide internet anywhere in the world. Its users include airlines, cruise ships, and other companies and people working or living in remote places in the world that regular providers don’t cover.
Starlink is vastly different from normal satellites which give them unique advantages that regular service providers don’t offer. Unlike regular satellites, Starlink sets up their web significantly closer to Earth, only around 550 kilometers away - or the distance from London to Paris. Traditional satellites in comparison, are set up around 35,000 kilometers away or nearly the entire circumference of the Earth. Starlink also uses a mega constellation of over 10,000 small satellites as opposed to the regular method of a few big satellites.
Starlink also connects differently than a regular service provider. Instead of hiring a technician to drill holes in your wall in order to make space for wires, all you need is a Starlink kit and you can set it up yourself. This also means that when moving, you can take your Starlink kit with you instead of having to call a technician to reinstall Wi-Fi in your new home.
Starlink isn’t perfect, while still providing fast data, speeds are traditionally slower than good service providers. In addition, heavy rain or snow can often affect Starlink reliability.
In 2025, Starlink generated approximately $11.4 billion in revenue, an increase of over 50% year-over-year8. This $11.4 billion accounted for the majority of SpaceX’s revenue and is the only current profitable part of SpaceX’s business, providing around $3 billion in free cash flow in 2025.
Commercial Launch:
The second part of their business is their commercial launch services. Essentially, SpaceX charges other companies in order to bring anything up to space. SpaceX is and will likely serve as the logistics backbone of the space economy. Anything that moves around outside of Earth, SpaceX is essentially taking a cut on. Today, the majority of what is being taken to space are satellites, however launch is also used by NASA and the Department of Defense for their own purposes.
This is a business with almost unlimited potential. With reports that anything from fiber optics to pharmaceuticals might be potentially cheaper to build in space, SpaceX has a unique opportunity to be toll booth of the entire space highway. The formula is very simple, the more things going into space, the more money SpaceX makes. For those who believe that the space infrastructure will grow, as long as SpaceX can continue to stay ahead of its competitors this business could turn profitable quickly.
Currently, despite generating $4.1 billion in revenue, an 8% growth year-over-year, launch generated a $3 billion loss in free cash flow. Notably, this was mostly due to the fact that the majority of SpaceX launches were filled with Starlink, not because the business itself wasn’t profitable.
xAI:
On February 3rd, 2026, SpaceX announced a historic deal. A purchase of xAI, Musk’s AI play which had previously bought X, the social media formerly known as Twitter. In the largest acquisition in history, Musk merged space, AI and essentially turned SpaceX into a futuristic everything project. Musk called it:
“The most ambitious, vertically integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform”9.
xAI, the company behind Grok, is an LLM competitor to Anthropic, OpenAI and Gemini. That being said, Grok is currently “niche” with less than 1% of market share, its main users being X users. ChatGPT alone has 90x as many weekly users as Grok. xAI’s revenue is estimated at $3.8 billion, a massive 38x growth year-over-year, mostly due to the merger with X, which generates approximately $3.3 billion in revenue10. xAI standalone revenue with X is estimated at only $500 million in 2026. It is worth noting that xAI is a cash burning machine, burning through an estimated $14 billion last year more than Anthropic and OpenAI combined.
One of the main reasons for this and what causes xAI to stand apart from its competitors is its data infrastructure. Their Colossus AI supercomputer in Memphis is the largest one in the world, and it houses over 220,000 Nvidia GPUs. A few days ago, Anthropic reached a landmark deal with SpaceX (and xAI) to lease the entire Colossus data center, a deal that should give SpaceX another predictable revenue stream for years down the line11. xAI meanwhile, is moving their operations to the newer Colossus 2 facility. It is an interesting deal with a company that Musk has previously had intense ideological disputes with in the past.
xAI is essentially trying to pivot from a competitor to the big LLMs, to a company that runs the compute needed to power them. Critics will say that this is due to the massive failure of Grok, Musk fans will claim that it is another genius pivot from Musk.
Other Business Parts:
While these are the main business parts and revenue streams of SpaceX, there are additional sections of the business that are worth briefly mentioning.
Government Contracts and Starshield:
SpaceX also has a number of contracts with the US government and military. These government and military contracts are mainly with the US, although SpaceX has expanded to other government entities and allies as well. Starshield, SpaceX’s government and military program was specifically built to pair with different militaries and provides service with additional security to remote areas, something that militaries around the world use.
Starshield leverages SpaceX's Starlink technology and launch capability to support national security efforts. While Starlink is designed for consumer and commercial use, Starshield is designed for government use12
Some of the other government contracts include SpaceX’s partnership with the European Space Agency to launch European missions along with other deals with countries like Japan and South Korea. Government and military contracts are projected to bring in $7 billion in 2026 with Starshield accounting for nearly half of that amount13.
Human Launch:
While this is currently not a large part of revenue, SpaceX does make money from sending astronauts to the International Space Station.
In the future, if there is a potential colony on the moon or mars, SpaceX could hypothetically, be the toll booth for every single person leaving the planet. In addition, if space tourism ever becomes more of an option as we saw with the group of celebrities who spent 10 minutes in space in April of 2025. This is likely only relevant for the ultra-rich but could be a potential revenue stream down the line.
While it is worth mentioning, human launch will likely never be a massive part of SpaceX’s business unless there is a fully functional colony on either the Moon or Mars where millions of people are flying each way.
Competition:
It is important to note that while today, SpaceX is ahead of all competition by a significant margin, competition usually follows only once a sector has proven profitable. If revenue begins increasing exponentially, investment money will immediately flood the scene and likely begin to pose more serious threats to the moat of SpaceX. Even if one or two competitors can pose a threat to SpaceX’s prices, it could massively compress margins and erode profits.
This is already a scenario we have seen play out with another Musk company. When Tesla first produced its electric cars, criticism was extreme. They were compared to “golf cart technology” and their business model was described as “upside down”14. When Tesla became the most valuable car company in the world, dozens of other competitors began emerging. In 2020, Tesla led all companies in EV sales with 16% of global market share15. In 2025, Tesla sold only 7.8% of electric vehicles, while BYD, the Chinese competitor, sold 19% of electric vehicles16. Despite this, Tesla is still by far the most valuable automotive company, perhaps due to their shift into Robotics.
Blue Origin:
One of the other wealthiest men in the world also has his eyes set on space. Jeff Bezos, the founder of Amazon founded a competitor called Blue Origin that will likely compete with SpaceX on launch. Blue Origin was the company that launched the group of celebrities previously mentioned to space and with Bezos and Amazon as partners, they will likely be serious competitors down the line.
Additionally, Amazon just released Project Leo, Amazon’s attempt to compete with Starlink. In the long run, Starlink will likely still outperform Project Leo, but as mentioned previously, a second competitor, even one not as good, can likely hurt margins for SpaceX in the only area of their business that is currently profitable.
Rocket Lab:
The second big competitor to SpaceX is Rocket Lab, who completed 21 launches in 2025 with a 100% success rate17. SpaceX in comparison launched 170 rockets last year18.
SpaceX is once again ahead of its competition, but Rocket Lab is quickly making significant strides to catch up. They are currently valued at $60 billion and just released an extremely impressive Q1 quarterly report in which the stock jumped 34% and crossed $100 for the first time. In the earnings report, they announced deals with Anduril, and the US space force, deals that would likely traditionally go to SpaceX.
Other Potential Competitors:
There are dozens of other potential competitors that are worth mentioning briefly.
In the US, the United Launch Alliance, a joint venture between Lockheed Martin and Boeing is currently the primary alternative for national security launches. In Europe, Arianespace is leading Europe’s commercial launch market. While not currently competitive on pricing, as relationships continue straining between the US and Europe, Europe may prefer to have their own self-reliant option. In Asia, the Indian Space Research Organization is currently the leader in cost-efficient launches. Finally, China has a number of competitors who often get massive government funding.
Currently, SpaceX is ahead of all other competition however if space does turn into a profitable field, the money pouring in will likely cause some serious competitors to rise up. Think about within a few years of ChatGPT’s launch, once it began to prove valuable, hundreds of other companies immediately entered the AI space and OpenAI had seen serious pressure from other competitors.
The Musk Factor
Elon Musk is one of the most controversial figures in our time. He is undoubtedly one of the greatest entrepreneurs of all time. While most people would consider leading a single company to a billion-dollar valuation a huge success, Musk is the only person in history to lead two companies to trillion-dollar valuations. Musk began by founding Zip2, which was later sold for $300 million before he founded X.com. After its merger with Confinity Musk transitioned into being the CEO of PayPal. Incredibly, he has founded SpaceX while managing Tesla all while also founding xAI, Neuralink, the Boring company and more. Musk is without a doubt one of the most impressive builders of our generation.
Due to Musk’s success, he has attracted something of a cult following. There are those who believe that all that Musk touches turns to gold, which is unfortunately far from the truth. He does have an incredible ability to pivot and sell his new vision, even if it seriously contradicts his previous statements.
Musk has had a full steam ahead approach in every company he has run, which while often leading to massive success, has also caused some huge failures. It has also caused him to often make promises and share visions that often totally miss the mark. Whether this is deliberately misleading shareholders in an attempt to raise capital or Musk trying to set goals that push the companies he operates forward, often Musk sets targets which are late or even wholly missed.
Musk has also been open about this strategy, in a 2024 interview with Dwarkesh Patel, he announced that:
I generally try to aim for a deadline that I at least think is at the 50th percentile... which means that it'll be late half the time. If you pick a timeline where you are certain you're going to make it, then you're definitely being too slow." - Elon Musk
This sounds great in practice, but it also misleads shareholders. In 2017, he announced that within five years he would have two cargo missions on the moon and by 2024, two crewed missions that would step foot on Mars for the first time. A decade later, neither of these has happened.
Another example is only a few weeks after SpaceX purchased xAI for a record setting $250 billion, Musk put out the following tweet.
This tweet led many SpaceX investors to ask the following question, if xAI was not built correctly the first time around, why did we just perform the most expensive acquisition in history? Perhaps this is just an attempt by Musk to save one of his less successful companies using SpaceX. In addition, while the idea of merging space and AI sounds attractive, xAI is currently burning through approximately the total revenue that SpaceX generates. Why would SpaceX pay $250 billion instead of focusing on space expansion.
Interestingly enough, the top comment under the above tweet with almost 2,000 likes was praising Musk for being willing to admit his error calling him a founder “in a league of his own.”
But it doesn’t end there, Musk has also fully reneged on many of his statements. He previously put out the below tweet, which of course will be proven false in the next few months when SpaceX goes public.
Recently, Musk has walked back one of the main promises of SpaceX announcing that SpaceX would be shifting focus to the moon instead of Mars.
The comments on this post were far from positive. Many people saw this as Musk betraying SpaceX’s original goals and directly misleading shareholders. “Have you considered launching yourself into the sun instead?” One user responded with over 2,200 likes.
While this might sound very negative, it is also important to look at the flip side of investing in a Musk led company. Despite Musk routinely not being able to deliver on all of his promises with Tesla, Tesla is still $100 billion more valuable than the fifty next car companies in the world19. xAI shareholders, who were holding a company losing a billion dollars a month with no plans of going public, now have transformed their shares into much more valuable SpaceX stock. No matter what, Musk seems to always find a way to deliver returns to his shareholders.
Musk may not have delivered on all of his promises, but he has delivered massive returns to his shareholders. The market when dealing with Musk chooses to price the long-term vision, not today’s delivery.
For those who do choose to invest in Musk, it is important to note that you are investing in today’s vision of what Musk believes. As his vision for the company shifts, Musk will decide to do whatever he believes is in its (or perhaps his) best interest. And unlike Tesla, who went public at only a $1.7 billion valuation, SpaceX will likely be targeting a valuation of $1.75 trillion or 1000x the size. This is a company priced to perfection, not a Musk startup with huge asymmetric upside. The caveat, if there is anything we should learn from previous Musk companies, it is that investing in his ideas usually returns huge returns.
The last hypothetical that is important to consider, is that while it is impossible to not factor Musk into the equation, if he was not at the head of a company, what would the valuation be? Musk companies have returned incredible increases in share prices, but they haven’t generated cash flow in the same way that the other massive tech companies have. At some point the chicken will come home to roost if decades pass without generating actual cash flow for the benefit of the shareholders. It is important to be wary of having a belief in a man more than in the company itself.
Valuation:
As mentioned in my breakdown of Anthropic, when valuing private companies, I prefer to draw inspiration from Warren Buffett and look at buying the business as a whole for its current valuation20. Assuming that SpaceX achieves its desired valuation of $1.75 trillion, you are purchasing a business worth more than Meta, a company that has three billion users daily on their platform.
When evaluating SpaceX, there are a few vital questions to ask.
What will the future of SpaceX be? Will they succeed in their promises and if they do, will that success prove to be profitable?
What is SpaceX’s total addressable market (TAM)? Where will the revenue be coming from?
Is SpaceX trading at a fair valuation?
Why did Musk merge xAI with SpaceX and why is he bringing SpaceX public when Musk had previously stated numerous times that he does not want to bring SpaceX public.
I will try and properly answer all of these questions as concisely as possible.
It truly is impossible to know what the future of SpaceX will be. While SpaceX has succeeded in pulling off feats that were previously deemed impossible, it is important to look at the two initial goals laid out when the company was founded.
Their first goal of building a successful colony on Mars seems to be decades away at the current moment. The pivot to building a colony on the moon instead, seems like an admission that a Mars colony is nowhere close to fruition. As such, their first goal of making human life multi-planetary seems extremely distant. Their second goal of revolutionizing space technology while reducing the cost of space access has arguably been carried out and continues to be expanded consistently. Starlink, has proven profitable and the launch business while not currently profitable can potentially be turned profitable in the next few years.
SpaceX’s total addressable market is split into two categories. Everything and anyone that will ever go into space and potential users of Starlink and other space technology that will be used on this Earth.
“We believe we have identified the largest actionable total addressable market in human history” SpaceX filing, April 2026.
When looking at their launch business, the TAM is technically endless, but it is more important to think what is practical rather than possible. According to SpaceX SEC S-1 filing, SpaceX has shifted its focus to AI data infrastructure. According to the filing, the goal is for SpaceX to be the tool that launches, builds and fixes AI data centers in space, a potential $28.5 trillion market. If SpaceX was able to capture even 1% of this potential market, they would likely be generating $285 billion in high margin revenue.
In 2019 when Uber filed for their S-1 filing, they claimed to have found a $5.7 trillion TAM in ride sharing21. While Uber has become a successful company, their revenue in 2025 was $52 billion, less than 1% of their alleged TAM. They also experienced roughly a 70% sell off a few months after going public and didn’t truly see a rise in the stock price until 2023, four years after going public. Understanding TAM is an incredibly important nuance in investing and is often overlooked, this post that I highly recommend goes over it in depth.
It is important to note that unlike flipping a coin, the odds are far from 50/50 in this scenario. As Uber became more and more successful, the competition in ride sharing platforms expanded, compressing margins. Uber’s potential TAM was also significantly more concrete than SpaceX’s was. Datacenters in space are currently one of Elon Musk hopeful projects, one that many analysts doubt will ever happen. That being said, this isn’t the first time Musk is taking on critics, and he often significantly outperforms expectations.
SpaceX claiming their TAM is $28.5 trillion is kind of like Duolingo claiming that their TAM is every person in the world multiplied by a potential 10 languages that every person in the world learns. It is technically possible but every single person in the world might learn ten languages on Duolingo, but that does not mean that we should view their TAM as 80 billion people.
The much more practical revenue stream and the one that has already proven to be profitable is Starlink. Starlink is allegedly targeting a $200 billion TAM. This is the total market that is potentially up for grabs for satellite companies. This market share is currently also being pursued by Amazon’s Project Leo, along with other potential competitors. It’s also important to note that Starlink is a relatively expensive option which is therefore only relevant to people with high salaries. Most of these people live in urban places where fiber is available at both a cheaper rate and offers a faster connection.
When looking at valuation, it is truly hard to justify their near two trillion-dollar valuation without wishful thinking. If SpaceX went public at a $1.75 trillion valuation, they would be trading at 110x price-to-sales. This is astronomically high. For context, Palantir, which has the highest valuation in the S&P 500, is currently sitting at a 63x price-to-sales. Tesla is at a 14x price-to-sales. Google and Nvidia, the two biggest companies in the world, are trading at 11x and 24x respectively.
One of the most positive metrics that is often pointed to is SpaceX announcing $8 billion in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) in 2025. EBITDA is often used to compare cash flows from similar businesses like Visa and Mastercard while ignoring accounting tricks they might include to make their business look more appealing. But there’s an important caveat when looking at SpaceX. SpaceX is a company that has massive depreciation expenses due to their extremely complicated asset heavy business. Using EBITDA for SpaceX is ignoring the billions in long-term costs that will inevitably take place when fixing and maintaining their costly resources.
If we look at the EV/EBITDA, often considered the gold standard when evaluating private companies, SpaceX trades at a 220x multiple22. This is once again significantly higher than even the fastest growth stocks and companies with the biggest moats in the most attractive industries. Some of the best companies in the world like Nvidia - 35x, AMD - 32x, Intel - 59x, Palantir - 65x and Google 29x all trade at multiples significantly lower than SpaceX. Unfortunately for SpaceX, this ratio doesn’t even include capital expenditure, something that SpaceX will likely have a lot.
It’s also important to note that SpaceX isn’t a small company that is considered a “growth stock.” While Palantir is trading at a 63x price-to-sales, it is only at $330 billion market cap, five times smaller than SpaceX. And even so, Palantir is only trading at such a high valuation because of their explosive growth that they have experienced consistently in the last few years, something SpaceX has not.
SpaceX is trading at an incredibly high valuation especially given its massive market cap, something that makes their growth prospects incredibly hard to conceive of going forward.
The final question is why Musk would merge xAI with SpaceX at an incredibly high valuation when he knew that xAI needed to be rebuilt from the foundation up. To this, I truly don’t have an answer. My best guess right now is that xAI is burning through so much cash that he needed them to go public as soon as possible to raise capital. Musk combining AI with his crown jewel, SpaceX will make capital flock in from eager retail investors.
The IPO and Red Flags.
There are a few key details in the SpaceX IPO that set it apart from an average company going public. Some of these are to be expected with the largest IPO in human history, others raise questions that there aren’t obvious answers to.
Normally, when a company goes public, there is a standard six-month lock up period to make sure that investors can’t cash out the second the company goes public. SpaceX allegedly is targeting an option to avoid this lock up period, meaning any investors could sell out immediately23. For early investors who have had their cash tied up for years, this could be a massive opportunity to exit when the stock is hottest, causing a major sell off that retail investors get hit with. Even if the stock follows the traditional six-month lock up period, there could be a massive selloff that follows it. When Uber went public in 2019, the stock struggled for the first six months. On the day that the insiders were finally allowed to sell their position, it tanked 7%. Beyond Meat surged in its first few months, when the lock up period ended, the stock dropped 20% in a day. While these are two examples of stocks with massive sell offs, research has shown that most stocks have a small 1.15-3.29% drop at the end of the lockup period24. Regardless of whether or not SpaceX’s stock struggles in the first few months, there is a risk of a major sell off that early investors should be aware of25.
A glaring red flag in SpaceX’s valuation is that it is going public at a valuation that isn’t independently agreed upon. Two years ago in 2024, SpaceX was valued at $350 billion. Unlike Anthropic, it hasn’t had incredibly fast revenue growth that would cause them to be valued by five times as much as they were two years ago. In fact, revenue has grown 60% in the time that the valuation has grown by 400%26.
In addition, a massive part of the $1.75 trillion valuation was added by xAI, a company that SpaceX bought with an all-stock deal in which Musk controlled both sides. And xAI isn’t exactly a safe bet. It is a company in an unproven industry burning through more cash than Anthropic and OpenAI combined and a company that every single co-founder except for Musk has left.
In the filing, Musk also admitted that its orbital data center plans “involve significant technical complexity and unproven technologies and may not achieve commercial viability.”27 This is the same company run by the man who claimed that AI was a “no-brainer.28”
The next red flag is that a significantly higher percentage of the shares is being released to retail investors. Typically, only around 10% of shares are available to the general public and the vast majority are saved for institutional investors. In this situation, a potential 30% of shares made public will be available to retail investors, a shockingly high amount. While this may sound good at first glance, it likely means that institutional investors are less interested and need the general public to finance it instead.
"In every transaction, there is a buyer and a seller; if you don’t know what’s being sold, it’s likely you."
For those who thought Musk was allocating a higher percent of the shares to retail investors so that more investors could get a piece of the next big thing, SpaceX is planning to only float 5% of their shares to the public, something George Noble, a former fidelity fund manager with over four decades on wall street called it “The most SHAMELESS structural manipulation of a major index I've ever seen”. Along with targeting early inclusion into the Nasdaq-100, SpaceX is essentially trying to force those invested in the Nasdaq index funds to buy a stock at five times the value in relation to what is available to the market. I’ve linked Mr. Noble’s post directly after this rather than in the footnotes because it is extremely worth reading.
While this potentially “shameless act” might sound like a negative, investors in SpaceX will be thrilled if investors in the biggest index funds in the world are forced to buy it. Tens of billions of dollars will provide a massive tailwind for a stock potentially facing extreme volatility. Noble’s criticism is legitimate, but that doesn’t mean it will not provide a massive boost to the stock.
Another red flag in the IPO is that the shares are being split into two different classes. Practically what this means is that Musk and insiders have the ultimate say in any decisions being made. For example, if the $250 billion purchase of xAI happened after SpaceX went public, shareholders would have no say in deciding whether or not they agree with it. This isn’t unique to SpaceX, Meta has a similar set up, but it is another question mark in an IPO that is full of them.
Finally, there is the important question of why SpaceX is going public when Musk has repeatedly said that he doesn’t want to bring the company public. As mentioned earlier, he even set a goal before going public, a “Mars Colonial Transporter flying regularly.” We aren’t even close, why the sudden shift?29
Invest Wisely:
Fundamentally, investing into SpaceX comes down to the big question. “How big will the space economy be?” Will space manufacturing take off? What about a Mars colony or mining valuable minerals from potential asteroids30? A lot of this sounds like science fiction but so did landing a man on the moon in the 1960s.
SpaceX today is far from profitable and even their revenue is extremely small compared to their valuation. Excluding Starlink, SpaceX generated only $5.5 billion in revenue, a number roughly half that of Lululemon’s $10.6 billion31. Notably, Lululemon is worth $15 billion, SpaceX is seeking a valuation over 100 times that amount. Even including Starlink, Spotify, worth less than $100 billion generated more revenue than SpaceX.
Those bullish on space will likely invest because they see space as the future and SpaceX as the market leader and the best way to invest in that. And while that might be correct long term, it is important today to not be someone else’s liquidity opportunity.
For anyone who invested in the private market, both in SpaceX and xAI, they will likely achieve incredible returns on their investment. Musk is famous for his promises that are often walked back, but he should also be equally famous for his wealth building. Retail investors investing in the public market post IPO have a much harder choice in this scenario.
For myself personally, as fascinating as I find this stock, at least initially, I will be staying away. It is hard to imagine that at this point I miss out on a 10x opportunity over the next few years and that SpaceX quickly becomes twice as valuable as Nvidia. If it does, I will be content with my decision. My only regret is not investing earlier when the stock was private.
https://www.forbes.com/sites/jonmarkman/2026/05/06/anthropic-just-signed-a-compute-deal-with-elon-musks-spacex/
https://en.wikipedia.org/wiki/Budget_of_NASA#
https://www.planetary.org/space-policy/nasa-budget
This number is adjusted to inflation for accuracy's sake. The original 1966 budget was $5.93 billion.
Source is from the book “Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future” by Ashlee Vance.
Also, from the book “Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future” by Ashlee Vance.
https://www.sciencealert.com/spacex-makes-history-with-the-first-ever-orbital-rocket-landing
https://www.kucoin.com/news/flash/spacex-financials-reveal-only-starlink-generates-profit-xai-loses-14-billion-annually
https://www.theguardian.com/science/2026/feb/02/elon-musk-spacex-xai-merger
https://sacra.com/c/xai/
https://www.idcnova.com/html/1/59/153/5749.html
www.spacex.com/starshield
https://spacexstock.com/spacex-profitability-trends-2026/
https://www.forbes.com/sites/brookecrothers/2016/02/06/tesla-model-x-unbuildable-business-model-upside-down-chevy-volt-guy-bob-lutz-doubles-down/
https://news.metal.com/newscontent/101370220-Sales-list-of-new-energy-car-companies-in-2020:-the-performance-of-the-new-power-of-car-building-is-eye-catching-Teslas-sales-soared-compared-with-the-same-period-last-year
https://autovista24.autovistagroup.com/news/which-brand-sold-the-most-evs-in-2025/
https://finance.yahoo.com/news/rocket-lab-successfully-launches-iqps-080400960.html
https://spaceeconomyinstitute.com/2026/01/15/record-launches-in-2025-as-spacex-prepares-a-heavy-turning-point/
https://companiesmarketcap.com/automakers/largest-automakers-by-market-cap/
https://preipomedia.substack.com/p/the-breakdown-anthropic
https://letsdatascience.com/news/spacex-targets-26-trillion-enterprise-ai-market-cb67f5d1
EV (Enterprise Value) to EBITDA is often considered the gold standard when evaluating private companies because it doesn’t factor in the funding of the capital and accounting tricks used by private companies, which we have significantly less data on then public companies.
https://marketwise.com/investing/spacex-ipo-3-unusual-things-musk-plan/
https://archive.nyu.edu/bitstream/2451/27072/2/wpa99054.pdf
https://economictimes.indiatimes.com/news/international/us/spacex-ipo-millions-of-investors-may-make-this-costly-mistake-dont-be-one/articleshow/130606344.cms
https://sacra.com/c/spacex/
https://thenextweb.com/news/spacex-orbital-data-centres-ipo-risk-disclosure
https://thenextweb.com/news/musk-wants-a-million-data-centre-satellites-bezos-wants-51600-scientists-want-to-know-why
https://www.reuters.com/article/markets/elon-musk-says-he-has-no-near-term-plans-for-spacex-ipo-idUSL1N0EI176/
https://www.bbc.com/future/article/20250320-how-close-are-we-really-to-mining-asteroids
https://www.macrotrends.net/stocks/charts/LULU/lululemon-athletica-inc/revenue
I like what I see here.
I think Space X has a tremendous potential, but it will have a bumpy walk on Wall Street. So there will be lucrative points of entry after IPO.