The debate
Few stocks have divided opinion as sharply as SpaceX. One side sees Mars, Starlink, the Tesla and xAI connections, and a founder who has repeatedly turned impossible ideas into reality. They see index funds that may soon be forced buyers and a company that could sit at the centre of multiple trillion-dollar industries. For these investors, the current business is almost beside the point.
The other side sees something entirely different. A company worth roughly US$2 trillion despite still losing money, buoyed by Elon Musk's cult-like following and a set of assumptions that stretch far into the future. To them, this looks less like the future and more like the dot-com bubble with a launchpad bolted on.
Of course, most investors sit somewhere between these two extremes.
The spread in analyst valuations tells a similar story. Morningstar ran the numbers and arrived at a fair value of US$63 per share. Oppenheimer initiated coverage at US$190 and lifted its target to US$250 within a week. Those analysts are working with very different assumptions about the future, which is why they arrive at such different conclusions.
At listing, SpaceX traded at roughly 110 times sales, a valuation that became even richer as the share price climbed. That's undeniably expensive, but it isn't entirely unprecedented. A small cohort of companies operating at the frontier of AI, space and deep technology also currently trade at similarly aggressive multiples. AST SpaceMobile trades at almost 300 times sales, while IonQ, Nebius, Rocket Lab, Arm Holdings and Cerebras all trade around 90 to 110 times sales.
The point here is not that SpaceX's valuation is reasonable. Rather, the comparables provide a backdrop for the environment giving rise to a valuation like this. Some investors have already demonstrated a willingness to pay extraordinary multiples for companies pursuing ambitious visions of the future. SpaceX is not arriving in isolation.
The possibility
Musk recently suggested the company could generate US$1 trillion in annual revenue by 2030, up from roughly US$18.7 billion in 2025. While that sounds extraordinary, even Wall Street's more conservative forecasts remain enormous. Goldman Sachs has estimated SpaceX could generate more than US$470 billion in revenue by 2030, while Morgan Stanley has projected almost US$330 billion.
If anything close to those forecasts eventuates, today's valuation may look considerably less demanding in hindsight. Whether investors have fully accounted for the cost of getting there is another matter. Reports that SpaceX is preparing a bond sale of at least US$20 billion sent the shares down 16%. Everyone loves a renovation until the invoices start arriving. And for SpaceX investors, this may be the first of many.
Like any transformative technology, there is often a huge gap between what believers and sceptics see. Not just what a company is today, but what it could become. An online bookstore in the 1990s. A digital asset in 2009. Most new ideas fail. Some survive and make the doubters look foolish.
History suggests these debates can persist for years. Bitcoin has been around for 17 years and people still argue whether it's worth zero or US$1 million. Amazon was dismissed as overpriced in 1999. Both have endured crashes of more than 90% along the way. Of course, it's easier to point to the examples that survived. For every success story, there are countless businesses and technologies that once appeared equally transformative but never fulfilled their promise.
The problem, of course, is that markets don't wait for certainty. Investors still need to decide what to do while the debate is unfolding. And over the coming months, that debate may be influenced less by grand questions about Mars and trillion-dollar industries, and more by something far simpler: supply and demand.
The reality check
While nobody knows how the story ends, the next phase of the story is more clearly structured.
Things begin to change in August. Following the release of Q2 earnings, an initial tranche representing 20% of shares will become eligible for trading. A further 10% may unlock if SpaceX trades at least 30% above its IPO price of US$135 (US$175.50) for five of the 10 trading days surrounding the earnings release. Then, from 20 August, a further 7% of shares will begin unlocking, followed by rolling 7% releases roughly every 15 days through to late October. JPMorgan estimates that between 40% and 50% of SpaceX shares could become unlocked between mid-August and mid-December.
One thing to keep in mind, however, is that share unlocks do not necessarily translate into equivalent selling pressure. Some holders may want out. Others may not.
Of those who may be inclined to stay the course, Musk owns roughly 42% of the company and cannot sell until June 2027. Other large shareholders include Alphabet, which owns around 6% of SpaceX and has held its stake since 2015, as well as investors such as Baillie Gifford and Ron Baron, both long-time supporters of the company. Baron reportedly bought even more shares at the float.
Venture capital firms sit in a different category. Founders Fund, Sequoia, Andreessen Horowitz, Valor and others invested years ago, with some sitting on gains of thousands of per cent. Venture funds eventually need to return money to their own investors, which means selling is generally part of the process.
How much of that stock ultimately comes to market, and how well buyers can absorb it, will be the real test. Recent history offers some clues about what can happen when a large block of previously restricted shares becomes available all at once.
When Palantir went public in September 2020, insiders could initially sell only 20% of their shares. The remaining 80% became eligible for trading in February 2021. On the day those restrictions expired, the stock fell 7% on heavy trading volumes, extending a six-day decline of more than 30%. There were a range of other factors in the mix, including disappointing earnings at the time, but Palantir ultimately went on to fall almost 80% from its post-listing peak.
SpaceX's situation is somewhat different, with shares unlocking gradually over time. That gives investors an opportunity to watch how supply and demand evolve, rather than absorb a sudden shock all at once.
Even so, SpaceX faces an uphill battle against the well-documented trend of long-term IPO underperformance. A Nasdaq study of companies that went public between 2010 and 2020 found that almost two-thirds were underperforming the broader market three years after listing.
While investors brace for future lock-up expiries, another catalyst may provide support in the near term. SpaceX is expected to join the Nasdaq 100 around the beginning of July, barely weeks after listing. Many investors view index inclusion as a bullish catalyst because funds that track the benchmark become forced buyers. Analysts estimate this could generate between US$7 billion and US$10 billion of demand, although Nasdaq will adjust SpaceX's weighting to reflect its relatively small public float. Given how few shares are currently available for trading, that demand may prove meaningful in the near term, though its influence could fade as larger lock-up expiries begin.
The larger prize, inclusion in the S&P 500, remains further away. SpaceX still needs to achieve sustained profitability before becoming eligible.
Whatever you make of index inclusions, they are likely to be tailwinds rather than the main event.
For those participating, risk management and position sizing will be key. For those sitting on the sidelines, SpaceX will remain a useful barometer of broader market sentiment and a stock worth keeping on the watchlist.
The SpaceX IPO may be over. The process of figuring out what the company is actually worth is only just beginning.
Intelligent people can look at the same company and reach very different conclusions about what comes next. The gap between those views is where both the opportunity and the risk reside.
Every generation has its Icarus stories. The difficulty is that, at the outset, Icarus and the Wright brothers tend to look remarkably similar.
