r/valueinvesting
SpaceX IPO on 12th June ($SPCX) - here's why I'm not buying
Author refuses to buy SpaceX IPO due to absurd 266x EBITDA valuation, massive cash burn from xAI merger, and declining Starlink ARPU.
- Starlink demonstrates exceptional profitability with 39% operating margins and 50% revenue growth.
- SpaceX maintains a dominant market position in satellite internet and space launch.
- IPO valuation at 266x EBITDA is unjustified and vastly exceeds mature tech peers.
- xAI merger is destroying value, burning billions in cash and causing massive net losses.
- Starlink ARPU has dropped 33%, indicating pricing pressure despite subscriber growth.
I spent two weeks reading the SpaceX S-1.
And I'm not buying the IPO tomorrow.
Let me be clear upfront: Starlink is one of the best businesses I've analyzed in years.
39% operating margins. 63% EBITDA margins. 50% revenue growth.
If Starlink were its own public company, I'd probably be writing a very different post.
The valuation timeline is what bothers me.
• $350B in May 2025
• $800B in December 2025
• $1.25T after the xAI merger
• $1.75T at IPO
That's a 5× increase in twelve months.
The election. The merger. The IPO announcement.
Each added hundreds of billions in value, yet none were driven by a major improvement in the core business.
Then there's the merger.
Before xAI, SpaceX earned $791M in net income during 2024.
After the merger:
• 2025 net loss: $4.9B
• Q1 2026 net loss: $4.3B
One quarter nearly matched the entire prior year's loss.
The segment breakdown is even more striking.
• Starlink operating profit: +$4.42B
• AI segment operating loss: -$6.35B
One business is carrying the company.
Another is consuming cash at an extraordinary rate.
xAI generated $3.2B in revenue but burned roughly $14B in cash.
AI capex reached $7.7B in Q1 2026 alone.
The company also carries $29B of long-term debt, and the S-1 suggests additional capital raises are likely.
One detail I haven't seen discussed enough:
Starlink ARPU fell from roughly $99/month in 2023 to about $66/month today.
That's a 33% decline.
More subscribers. Less revenue per subscriber.
Now consider valuation.
Meta: \~22× EBITDA
Alphabet: \~18× EBITDA
Microsoft: \~28× EBITDA
SpaceX IPO: \~266× EBITDA
For that multiple to work, investors need:
- Starship to achieve sustained operational cadence
- xAI to become a highly profitable business
- Terafab to succeed despite having no binding agreements today
All three....At the same time.
Two other things worth knowing:
• Elon Musk controls 85% of voting rights through super-voting shares
• Retail investors are receiving roughly 30% of the float versus \~10% for a typical mega-cap IPO
I'm not arguing the company fails....The bull case is real.
But at $1.75T, investors are paying a premium price today for outcomes that still need to be proven....
On the other hand, Tesla has a similar sized market cap as what SpaceX is shooting for. There doesn’t seem to be a lot of value investing logic in Musk companies, everything is very speculative
tryn to value Musk companies is how excel develops trust issues
Im sure everyone thinks its bullshit. But someone thinks they can make money from it. That’s how we get these situations
I agree. What do you think about buying SpaceX shares a few months out from here after letting everything cool down?
Im not touching it at all
Anyone feel like these market dips happening may be funds repositioning to buy spcx? It’s hard for me to believe the market is dipping on small changes in the 10 year yields or Iranians launching a few rockets at radars in Kuwait.
I think it’s a mix of both macro and funds repositioning to buy SPCX.
Can we please stop with these AI substack shill posts already?
Enron Musk lives in simulation. He should use his doge coins to fund this and move himself to Mars or wherever to build his own simulated civilization. This kid better play xbox games
to be fair, Mars is probably still cheaper than his IPOs
If I get a dollar for every spcx post. I would be able to afford my LULU bag
Why should a space tech company be valued more than a company that produces things people use every day?
People use Nvidias AI chips in their everyday lives?
People use MU product in their every day lives?
I was referring to Apple.
But people absolutely use Micron products in everyday life, semiconductors are everywhere. I don't see what's so special about space that would justify a high valuation?
Satellite technology imo
If you like margins and growth, take a look at RDDT
Okay, here is the simple fact: everything about Musk has very little to with "value investing" at all. It is sort of meaningless analysing whether this is a good businese or not, as the core problem is still "how much Musk premium in narrative" can be cooked?
The businese itself might be good from abalytical point of view, but it has always been meaningless when to how much Musk premium cooked in stocks.
You can have him for three fidy
If you base everything on the past. You are living in the past and you will be past.
I remember when people bashed a new IPO Stock TSLA. They were saying they couldn't survive because they weren't going to be able to sell cars without using car dealers. This still proves the stock market is a place where people with brains and money get together and exchange. For those of you who buy good luck, for those of you who just sit on the side lines and continue to bad mouth a genius enjoy missing out.
Absolutely wouldn’t invest long term, or even short term in this company,
At the same time, I still applied for shares cause I think the odds of a day one pop are decent,
I actually have the opposite approach, I don't have any problem to buy the stock but the business at that point will have to make sense.
Everyone should buy this IPO.
So everything else is cheaper for me. 😆
Stay away from this garbage
It's called revenue.
If a company brings in 100mil a year, but spends 10bil....it's built on speculation. Apple isn't speculation.
Honestly, that makes sense
I mean 😂....even knowing this people will buy the ipo
okay boomer