SpaceX’s stock market debut: Five risks investors need to know
A Historic IPO and Unprecedented Valuation
SpaceX s stock market debut – Elon Musk’s rocket company, SpaceX, is poised to make history with its upcoming stock market debut. Set for a Friday listing on the Nasdaq under the ticker symbol SPCX, the IPO represents the largest-ever public offering. The company has priced its shares at $135 each, securing $75 billion (€64.5bn) in capital and positioning its valuation at a staggering $1.75 trillion (€1.5trn). This surpasses the previous record set by Saudi Aramco in 2019, which was later boosted through an overallotment option. The scale of the offering has drawn global attention, with retail investors in Europe and beyond playing a significant role in its success.
According to Bloomberg, the demand from individual investors during the IPO process was exceptionally high. Orders through platforms such as Robinhood, Fidelity, and SoFi totaled roughly $100 billion (€86.6bn), dwarfing SpaceX’s fundraising target. This surge in interest highlights the allure of the company’s vision and its potential for future growth. However, the enthusiasm has also raised concerns about whether the valuation is justified, especially given the company’s current financial trajectory.
The Risk of Overvaluation
At its current valuation of $1.75 trillion (€1.5trn), SpaceX’s stock appears to be trading at a premium that many analysts find challenging. The company’s annual revenue in 2025 was $18.7 billion (€16.1bn), which means investors are effectively valuing the firm at approximately 94 times its earnings. This multiple is significantly higher than that of established tech giants like Nvidia, which trades at less than a quarter of the same level. While such valuations are common for high-growth startups, they also carry the risk of being overly optimistic.
“The stock is significantly overvalued, and sustaining the price will require revenues exceeding $100 billion (€86.6bn) by 2030,” noted Goldman Sachs in its analysis. The firm’s projections imply a compound annual growth rate of over 40%, a target that may seem ambitious given the company’s current performance.
Morningstar, another research firm, has echoed similar concerns, labeling the valuation as “significantly overvalued.” The firm’s assessment suggests that the market may be pricing in future growth without fully accounting for current challenges. For instance, the prospectus reveals that SpaceX is still operating at a loss, despite its rapid expansion. The company’s core revenue streams come from Starlink, its satellite internet service, and its newer ventures in artificial intelligence through xAI, which merged with SpaceX in February 2026.
Market Dynamics and Limited Float
One of the key risks tied to SpaceX’s IPO is its limited share availability. Only about 3% to 4% of the company’s total shares will be publicly tradable from the outset, meaning the market value will depend heavily on a relatively small portion of its equity. This situation has sparked debates among investors, with some arguing that the constrained float could artificially inflate the stock price in the short term.
Reports indicate that over 75% of the $75 billion (€64.5bn) offering has already been allocated to existing investors and insiders. This leaves fewer shares for retail and institutional buyers, potentially limiting the initial liquidity of the stock. Morningstar has suggested that the limited float, combined with strong demand for artificial intelligence-related stocks, might temporarily support the price. However, the firm also warns that the true test of the stock’s value will come once lock-up periods expire and more shares enter the market.
Controversy Over Index Inclusion
The anticipated inclusion of SpaceX in major stock indexes has become a topic of debate. Investment officials from four large U.S. states have called on Nasdaq and FTSE Russell to clarify recent rule changes that could expedite the company’s entry into these benchmarks. While proponents argue that the changes reflect broader market trends, critics warn that the move might expose passive investors to a highly valued stock before they can fully assess its fundamentals.
This issue is particularly relevant because SpaceX’s inclusion in the Nasdaq 100 could attract significant inflows of capital. Estimates suggest that between $22 billion (€19bn) and $27 billion (€23.4bn) in passive investments could flow into the stock once it joins the index. However, this influx may not be enough to offset the risks of overvaluation, especially if the company fails to meet its projected revenue targets.
Financial Performance and Profitability
Despite its soaring valuation, SpaceX’s financial results reveal a mixed picture. The prospectus shows the company is growing rapidly, but it remains unprofitable. Starlink, which provides the majority of its revenue, is the only profitable segment of its operations. Meanwhile, the artificial intelligence arm xAI, now integrated into SpaceX, has contributed to recent losses. The filing notes that the AI unit recorded an operating loss of about $6.4 billion (€5.5bn) in 2025, with additional expenditures in early 2026 as it expanded its infrastructure.
SpaceX’s net loss for the first quarter of 2026 was $4.27 billion (€3.7bn), a sharp increase from $528 million (€457 million) in the same period the previous year. This growth in losses is attributed largely to the AI division’s aggressive expansion. While Starlink’s profitability is a stabilizing factor, the company’s reliance on this service raises questions about its long-term financial sustainability. Investors must weigh whether the potential returns from emerging technologies like AI will justify the current valuation.
Long-Term Uncertainty and Market Volatility
The IPO’s success hinges on the market’s ability to absorb SpaceX’s high valuation and limited float. Historical data offers a cautionary tale: according to research by Jay Ritter, often dubbed “Mr. IPO,” IPOs between 2012 and 2021 typically rose by 23.6% on their first day of trading but delivered only a 10.6% return over the next three years. This pattern suggests that while initial hype can drive rapid price gains, sustained growth is not guaranteed.
SpaceX’s journey is further complicated by the uncertainty of its future projects. While the company has already achieved milestones in space exploration and satellite internet, its expansion into AI and other cutting-edge technologies remains unproven. Investors must consider whether these ventures will generate the revenue needed to support the current valuation or if they will become costly ventures without clear ROI.
In the end, the IPO’s outcome will depend on a combination of factors: the company’s ability to meet its revenue projections, the resilience of its limited float, and the market’s appetite for high-growth investments. As the stock market debut approaches, the balance between optimism and skepticism will shape its trajectory in the months and years to come.
