r/stocks
The math isn't mathing on the SpaceX IPO
Author heavily criticizes SpaceX's $2.1T IPO valuation, citing an absurd 112x P/S ratio, net losses, and an inflated TAM.
- Absurd valuation: Trading at 112x sales with a $2.1T market cap on $18.7B revenue, while posting a $4.9B net loss.
- Misleading revenue mix: Only Starlink generates cash, making it essentially a satellite ISP with a cash-burning xAI division attached.
- Inflated TAM: The $28.5T total addressable market in the S-1 is an unrealistic figure used merely to justify the massive valuation.
Everyone is cheering the 19% pop like it proves something. It doesn't. Let's actually look.
SpaceX closed today near a $2.1 TRILLION market cap. Their 2025 revenue? $18.7 billion. That's a price to sales ratio of about 112x. Not earnings, SALES. And they didn't even have earnings, they posted a $4.9 billion net loss for the year.
For context, Apple trades around 9x sales. Nvidia at the absolute peak of AI mania was around 30x. SpaceX just IPO'd at nearly 4x that, while losing money.
And it gets better. The ONLY part of this company that actually prints cash is Starlink, which did $11.4 billion of that revenue. So you're paying a $2 trillion valuation for what is basically a satellite ISP wearing a rocket costume, with an xAI cash furnace bolted on that they conveniently merged in two months before the roadshow.
Then there's the $28.5 trillion "total addressable market" in the S-1. Twenty eight TRILLION. That is a number you write down when you need the valuation to make sense and the actual income statement won't cooperate.
Either I'm missing something huge or a whole lot of people just bought a story at 112x sales and called it investing. Tell me where the math closes, because right now it doesn't.
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Exactly how does 112x multiple sound even remotely reasonable even if u account for future cash flows? How long will it take for it to make sense? what if Elon musk passes away in near future, how low will this tank?
The price of the stock is the price that people buy and sell the stock at. Your personal opinion about the value of the stock doesn't factor into that. It's great that people expose themselves as financially illiterate so quickly.
Do the opposite of what’s on cnbc. Look up Jon Najerian about what he said about people on cnbc!
Probably so he only faces half the insider trading charges down the line.
Give it a year or 2 is my guess.
The S-1 shows that both the Google and Anthropic deals have 90-day mutual cancellation clauses. In fact, Google explicitly called theirs a 'temporary bridge lease' until their own tech is ready. If those two walk in a year or two, that $50B run-rate instantly collapses.
Also, the reason for the "excess capacity" is that Grok's user engagement cratered by 60%, leaving 220,000 Nvidia chips sitting idle at an 11% utilization rate. It was more of a salvage operation by Musk, than a calculated infrastructure play.
Institutions are buying the hype because they want to front-run the forced index buying when it hits the Nasdaq-100 next month. That doesn't mean the fundamentals are there.
Yes, and that’s why I said reported deals. We don’t fully know how long or how much of that will remain quality recurring revenue (standard metric in valuations).
It’s highly unlikely that either Anthropic or Google simply walk away in a short time unless the actual business integration falls apart. What these numbers show is that there is AI compute demand that SpaceX can credibly fill. And that’s unlikely to change given how big the TAM is projected to be by the entire industry.
Also, Google is a part owner of SpaceX so they are not going to risk their $200B+ stake going down on their balance sheet unless they have no choice but to cut ties with SpaceX. It’s unlikely anyways given Elon’s power and relationship with Google.
Yeah we just need to be clear on how many ifs, buts and maybes are at work with trying to make this narrative around the valuation make sense.
You didn’t even mention the cash being bled from all of the shell companies that were just merged into SpaceX as well. This IPO was set up so the American people will have to fund Elon’s quest to rule the world through their 401ks. This was why he purchased Twitter and proceeded to buy himself a presidency so that all of the regulators would be forced out to pave the way.
I'm still here. The Republicans are nazis.
I've earned it
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This is surprising. You're the first to post about it!
Don’t forget the 30 billion they get for this ai every year
Because its only valued at 2.1 trillion if you believe the other 96% of shares would sell at the same rate as 84 billion for 4%.
All it really means is that the company can tap 75 billion from people who care about things other than the fundamental value i.e speculation on technicals, myths, souvenirs.
Unfortunately the index funds will be forced to pay up a decent chunk of that as well.
Gradually insiders sell, float goes up, and value eventually goes down towards reasonable.
Bear case: Wait until lock ups expire. Think it's 15 days for anyone who got shares via IPO, after earnings for early investors and insiders. Google, insiders, etc will dump the full 20% post earnings. That'll increase float and the market will price this in. Over the next 12 months as lock ups expire, more and more of the float will be dumped until it's very likely worth a fraction of what it was. Any time there's a large retail allocation, it's always because they are dumping.
Bull case: SpaceX has monopolised launch capacity in the West. Space is the last frontier and the US wants a moon base before the Chinese which they'll back at any price. Starlink has military contracts they can extract more from long term. There's a real possibility they also acquire Tesla at some point.