SpaceX looks poised for a record-setting stock debut on the stock market — but some experts warn that retail investors should think twice before buying into Elon Musk’s firm at the peak of its trading frenzy.
Elon Musk’s rocket company, known for its Starlink satellites, aims to raise a record $75 billion at a staggering $1.8 trillion valuation when its stock prices around $135 a share late Thursday and begins trading on the Nasdaq on Friday under the ticker SPCX.
That’s despite the fact that SpaceX disclosed $4.9 billion in losses last year alone on revenue of $18.7 billion – with the gap expected to get worse as Musk pursues costly moonshot goals that include a colony on Mars and building AI data centers in space.
Analysts at investment firm Morningstar said they believe the company “has been significantly overvalued” and has set its own estimate at $780 billion – roughly half of what SpaceX is seeking from investors.
“Investors will have opportunities to buy the stock at more attractive levels after the IPO,” Morningstar analysts Nicolas Owens and Suryansh Sharma said in a blog post.
SpaceX’s current valuation is “contingent upon paving the way for novel revenue streams, such as orbital computing,” according to Morningstar. While they are plausible in time, their “viability, timelines, and financial outcomes remain highly uncertain.”
Even the most successful IPOs often experience a day-one “pop” on overall excitement about the stock, only to fizzle out as insiders begin selling. Those risks are higher in the AI era, with “Big Short” investor Michael Burry and others warning markets are in the midst of a major bubble.
Traders who buy shares in an IPO during the first day of trading and hold their shares for a period of three years saw an average return about 21% lower than if they had invested on a value-weighted market index, the Wall Street Journal reported, citing data from University of Florida professor Jay Ritter.
Ritter’s data tracked nearly 9,300 IPOs dating from 1980 to 2024.
SpaceX has set aside about 30% of the shares being sold in its IPO for retail investors, or about $22.5 billion. That’s much higher than normal, according to Fidelity, which placed the standard offering for retail at about 5% to 10%.
The SpaceX IPO is a “watershed moment” for the AI sector, which until this point had relied on private investors to power its ambitions, according to Wedbush analyst Dan Ives.
“This listing represents the first major test for public markets after years of muted IPO activity,” Ives said in a June 3 note to clients.
SpaceX will launch its IPO just ahead of its main rivals, Sam Altman’s OpenAI and Dario Amodei’s Anthropic. Each of those firms recently submitted confidential S-1 filings to go public, though they have yet to decide on the exact timing and size of their offerings.
The three AI giants are collectively worth approximately $3.6 trillion at their current valuations. SpaceX is targeting a roughly $1.8 trillion valuation in its public debut, while Anthropic raised money last month at a $965 billion valuation and OpenAI was most recently valued at $852 billion in March.
In what some analysts saw as an attempt to shore up investor sentiment, SpaceX announced a pair of significant deals on the eve of the IPO – an agreement to rent its Colossus 1 AI data center to Anthropic for $1.25 billion a month, and a similar $920 million deal with Google, which is a major SpaceX shareholder.
Starlink has become the primary revenue driver for SpaceX, with an existing network of more than 10,000 satellites in orbit and more than 10 million subscribers around the world. The Starlink division had an operating profit of $1.19 billion in the first quarter of this year.
SpaceX’s board of directors recently approved a pay package that would grant Musk a huge windfall of 200 million super-voting restricted shares – provided he is able to establish a permanent colony on Mars with at least one million residents while SpaceX hits a $7.5 trillion valuation.
The IPO could be as much a referendum on Musk as it is about SpaceX’s long-term prospects, according to investor Igor Pejic, author of “Tech Money.”
“It’s a story about whether public markets still believe that one extraordinary founder can create an entirely new economic frontier—and whether investors are willing to pay for that future today,” Pejic said in an email.
The IPO may end up being the latest step in a long-term transformation for Musk’s business empire, which included a merger between SpaceX and xAI in February.
“We continue to believe that SpaceX and Tesla will eventually merge (80%+ chance in our view) into one company in 2027 with the groundwork already in place for both operations to become one organization,” Ives said.
“Tesla already owns a stake in SpaceX after the company’s $2 billion investment in xAI got converted to SpaceX shares following SpaceX’s acquisition of xAI earlier this year initially tying both of Musk’s ventures closer together,” he added.
