SpaceX IPO at 94x Sales? Here's Why I'm Sitting This One Out
SpaceX IPO at 94x Sales? Here's Why I'm Sitting This One Out
Straight to it: I'm not buying this IPO
SpaceX is going public on June 12 at roughly $135 per share, aiming for a $1.75 to $2 trillion market cap right out of the gate. It launches rockets, it's led by Elon Musk, and it comes wrapped in a Mars story. And I'm still stepping back from it.
My reasoning isn't emotional. It comes down to one line of math.
The core: what a 94x price-to-sales ratio is telling you
The first number I look at on any valuation is the price-to-sales ratio — how much the market is paying for every dollar of revenue a company actually brings in.
SpaceX has about $18 billion in revenue. Set the target market cap at $1.75-$2 trillion and the ratio lands around 94x.
Here's the frame I use:
| Category | P/S ratio |
|---|---|
| Healthy | Under 2x |
| Expensive | Above 4x |
| SpaceX target | ~94x |
If I call anything over 4x expensive, then 94x is in another universe. It means a flawless future is already priced in. Starlink scaling explosively, the Mars business becoming real, launch costs falling for years — all of it baked into the price before day one.
What it means: a great company isn't a great investment
I'm not saying SpaceX is a bad company. It might be one of the most impressive companies of our era. But a great company and a great entry price are two completely different things.
On IPO day — especially for a hyped name — retail investors often end up holding the most expensive shares. Institutions and early backers got in far lower, and the launch-day excitement becomes the stage where they take profits.
That's why, instead of buying the stock directly, I lean toward indirect exposure through ETFs that give me a measured slice of names like this while diversification keeps the risk in check.
The risk and the counterargument
There's a fair pushback: "P/S doesn't matter for some companies." Amazon looked expensive on every traditional metric early on and still beat the market.
True. But that's survivorship — the rare names that made it. To bet on 94x, nearly everything has to go perfectly. I don't have enough conviction to put my capital behind those odds. I'll watch until the price comes back to something rational, or until revenue grows into the valuation.
Investing isn't a game of finding great companies. It's a game of buying great companies at good prices.
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