2 Reasons I Wouldn't Buy the SpaceX IPO With Free Money
Why it matters: A $2 trillion IPO valuation for SpaceX would place it in the echelon of the 'Magnificent Seven' companies.
- SpaceX is reportedly seeking a valuation of up to $2 trillion for its upcoming IPO, though CEO Elon Musk has pushed back on this specific Bloomberg report.
- SpaceX was valued at $1.25 trillion in February when it combined with xAI, Elon Musk's AI company.
- SpaceX dominates the commercial orbital space launch market and its Starlink unit is the world's largest satellite operator with over 9 million customers.
- The author highlights a significant risk in the potential $2 trillion valuation, noting it would result in a price-to-sales ratio of approximately 130, far exceeding most S&P 500 stocks.
- Elon Musk's leadership is identified as a key risk factor, citing his tendency to overpromise innovations and shift investor attention when deadlines are missed, as seen with Tesla (TSLA 1.85%).
SpaceX is reportedly preparing for an IPO that could reach a $2 trillion valuation, a figure CEO Elon Musk disputes, following its $1.25 trillion valuation in February after merging with xAI. Despite its dominance in commercial space launches and satellite broadband with Starlink, the author expresses strong reservations about investing due to the extremely high valuation and the inherent risks associated with Elon Musk's leadership style.
