SpaceX IPO: What You Need to Know

Summary

SpaceX is preparing for an IPO with a valuation of $1.77 trillion, despite reporting a $4.9 billion loss last year and over $37 billion in losses since inception. The company's revenue of $18.7 billion last year is 80% less than Nvidia's, and its price-to-sales ratio stands at an historic 95x. SpaceX's business is divided into three segments: connectivity (Starlink), space, and AI. Starlink was the cash cow in 2025, generating $11.4 billion in revenue and a profit of $4.42 billion. However, recent AI contracts with Anthropic for $1.25 billion per month and Google for $920 million per month are projected to bring in $27 billion over the next 12 months, potentially making AI the most profitable segment. The high valuation is attributed to Elon Musk's vision and the company's innovative achievements in rocket technology, which create an economic moat for Starlink. Potential headwinds include the company's lack of overall profitability, competition in the AI market, short cancellation clauses in AI contracts, and significant ongoing R&D and capital expenditures. A major factor to consider is the insider lockup expiration, which will make 7.5 billion shares eligible for sale, drastically increasing supply. SpaceX is allocating 30% of its IPO float, over $20 billion worth of shares, to retail traders, an unusual move. The stock's inclusion in the NASDAQ 100 on day 15 after the IPO is expected to create forced buying from index funds. Historically, IPOs tend to sell off within a year as insiders take profits, suggesting that day one may be better for traders than long-term investors.