When Tesla (TSLA) went public in 2010, the company had one car in production and just over $100 million in sales the year prior. Like many businesses seeking to raise capital through an Initial Public Offering (IPO), it was still unprofitable.
But the vision of its brilliant 38-year-old founder, Elon Musk, was not just compelling. It was revolutionary. The company was not only going to bring electric vehicles to the masses—they would be “computers on wheels.”
Through the IPO process, TSLA was assigned a valuation just under $2 billion and raised a little more than $200 million to pursue its ambitious business plan. Investors were excited, and the offering was significantly oversubscribed.
Musk did not let these early investors down.
Shares popped 40% on the first day of trading, but the real gains came to those who held on.
TSLA now trades around $350 per share. There were two stock splits along the way, which in combination increased the share count by a factor of 15. So if you invested in the TSLA IPO at $17 per share and held, your investment today would be worth more than 300 times as much.
To put this in perspective, a $10,000 investment in the TSLA IPO would now be worth more than $3 million.
Thanks to Tesla, Elon Musk has become the richest person in the world and among the greatest entrepreneurs in history. His first IPO changed lives.
To the delight of many, he is now coming back to the stock market with a second act.
The countdown begins
While building TSLA into one of the most valuable businesses in the United States, Musk remarkably found time to develop several other companies. He now intends to bring one of them public.
SpaceX has confidentially filed a draft S-1 with the SEC, initiating the IPO process.
No public prospectus has been released yet. So investors have not seen audited financials, detailed segment breakdowns, or full risk disclosures. Current reporting suggests the company is targeting a mid-2026 IPO, with a potential roadshow beginning in the coming months.
Given the miraculous performance of TSLA since its IPO, it is not surprising that investor interest in SpaceX is intense.
Media reports indicate that the offering price will be at an implied valuation of $1.5 to $1.75 trillion, possibly even $2 trillion. Even though the initial share offering will only be a sliver of the total ownership, it is still expected to raise $50 to $75 billion.
This will put SpaceX in the same league as the largest IPO in corporate history, the 2019 IPO of Saudi Aramco, the national oil company of Saudi Arabia that owns about one-sixth of the world’s known oil reserves.
Retail will have access
SpaceX is also reportedly planning an unusually large retail investor allocation, leveraging Musk and TSLA’s popular appeal.
While most U.S. stocks have about a quarter of their shares in the hands of individual investors, TSLA’s retail base is closer to half.
Musk has also cultivated an enormous following through his 2022 acquisition of the social media platform Twitter, which he rebranded as X. Musk has some 230 million followers on X now, far more than anyone else.
X now sits within a separate business unit called xAI, which also contains Musk’s AI platform, Grok. IPO investors will have exposure to these businesses as well because xAI was acquired by SpaceX in February of this year.
Normally, mom and pop investors only get allocated 5% to 10% of any IPO, with large funds and institutions getting favorable treatment thanks to their relationship with the underwriters. In the case of SpaceX, retail investors are expected to get more like 30%.
Given the expected size of the offering and retail’s unusually high allocation, it looks like ordinary investors will have plenty of access to this deal through their accounts on major brokerage platforms.
Excitement is clearly building. We have noticed it directly, with 76research subscribers starting to email us with questions about it.
The TSLA IPO produced life-changing gains. Everyone now seems to be asking themselves the same question…
Should I try to get in on this one too?
We have great admiration for Musk’s abilities and accomplishments—and the theoretical potential of the collection of businesses that have been integrated into SpaceX.
We are also not philosophically opposed to paying a premium for future value creation, if it is justified. Nor are we oblivious to the open-ended optionality that characterizes so many tech success stories.
A business like TSLA, for example, started as an electric car company but may end up making most of its money as a robot company.
Amazon (AMZN) started as a a bookseller, but now most of its profits come from providing cloud computing infrastructure via Amazon Web Services.
Yet, at the moment, we are inclined to approach SpaceX with a fair amount of caution.
Our issue with this one is simply math.
The valuation, based on levels being reported, already seems to capture vast future success, suggesting an unfavorable risk-reward profile. And the sheer size of the offering and high degree of retail allocation raise questions as to the capacity of the market to absorb all the new shares.
There is also the question of alternatives. SpaceX is not the only compelling growth stock out there with long-term potential.
The reported SpaceX valuation requires investors to assume an extremely high degree of future business success, orders of magnitude greater than current reality.
Meanwhile, there are other mega-cap tech stocks—SpaceX’s future peers—trading at valuations that seem to price in a sharp deterioration in their current growth trajectories. The contrast is stark.
When and if the IPO takes place—and the final details become known—we may have a more enthusiastic viewpoint, but for now, we think investors are better off focusing on attractively priced growth opportunities elsewhere.
What is SpaceX?
Musk actually created SpaceX in 2002, a year before he joined Tesla, which was a start-up business that he ultimately came to control.
From the very beginning, SpaceX has had an audacious and unusual corporate mission: to reduce space launch costs and enable human settlement on Mars (as a long-term back-up plan for civilization).
After early failures, a 2008 NASA contract helped stabilize the company. SpaceX developed the Falcon 9 rocket and pioneered reusability, dramatically lowering launch costs.
Today, the business of SpaceX can be understood through three primary pillars: (1) launch and space infrastructure, (2) Starlink, and (3) AI.
Launch services: the competitive edge
SpaceX provides low-cost, reusable rocket launches for commercial, government, and defense customers, generating mission-based revenue while underpinning the company’s broader space infrastructure strategy.
SpaceX operates Falcon 9 and Falcon Heavy rockets. They are both designed to be reusable, which has allowed the company to significantly lower the cost of accessing space.
A typical Falcon 9 launch is estimated to cost around $60–70 million. SpaceX completed roughly 165 launches in 2025, more than any other provider. Customers include commercial satellite operators, NASA, and the U.S. Department of Defense.
This segment also includes human spaceflight through Crew Dragon, which transports astronauts to the International Space Station under long-term NASA contracts.
Starship is the next-generation rocket. It is designed to be fully reusable and far more powerful, with the potential to dramatically reduce launch costs and increase payload capacity. However, it remains in development, generating little revenue today while requiring significant ongoing investment.
Starlink: the cash generator
Starlink is a global satellite internet network made up of more than 10,000 satellites in low Earth orbit. It now serves over 10 million users across more than 160 countries.
Customers pay a monthly subscription fee—typically $80 to $120 in developed markets, with lower pricing internationally—creating a recurring revenue stream that resembles a telecom business.
Within this segment is an increasingly important defense component, often referred to as Starshield, which provides secure communications and other capabilities to government and military customers.
The recurring revenue model is attractive and highly scalable, offering internet access to rural areas and millions of customers who live or work beyond the reach of traditional fixed and mobile networks.
But the business remains capital-intensive, requiring continuous satellite replacement and expansion to support growing demand.
AI: the growth driver
By bringing xAI into the company, SpaceX now has exposure to AI models, data, and software platforms, including Grok and the X ecosystem. This introduces a new layer to the business, connecting its global communications network with AI-driven applications.
A distributed satellite network could, in theory, evolve beyond connectivity into elements of compute and data infrastructure.
There has been increasing discussion around the concept of space-based data centers, where computing workloads could be handled in orbit rather than on the ground. The advantages could include access to abundant solar energy, reduced cooling constraints, and direct integration with satellite-based communications.
While this segment is still early and contributes a relatively small portion of current revenue—and may in fact consume capital—it plays an important role in how the company is being positioned by investors.
So what is it all worth?
SpaceX has incredible potential to innovate and grow. Given Musk’s track record, a high degree of optimism is more than warranted.
Expectations should be high.
But optimism also needs to be balanced with realism. And investors need to understand the relationship between the proposed valuation and near-term business fundamentals.
We do not have access to detailed financial statements yet, but the basic parameters of SpaceX’s financial condition have been circulating, allowing us to make some rough assessments and comparisons.
In 2025, all of the SpaceX business units generated revenue of just under $20 billion. In 2026, there are reports that revenue will be closer to $25 billion with the consolidation of xAI.
We also know what valuations were used when xAI was folded into SpaceX through the February stock-for-stock transaction.
The combined business at the time was valued (on paper) at $1.25 trillion. The original SpaceX business was valued at $1 trillion, while xAI was valued at $250 billion.
Using the $25 billion revenue figure for 2026, a potential $1.75 trillion IPO valuation puts SpaceX at a revenue multiple of 70.
It is important to emphasize—this is an extraordinary number. For perspective, at the end of March, the average Mag 7 stock was trading at closer to 8 times revenue.
Even TSLA, which is by far the most richly valued Mag 7 company by standard financial metrics, trades at approximately 13 times 2026 revenues (and nearly 200 times earnings, versus the median Mag 7 stock around 26 times).
SpaceX has a lot of growth potential, but there are no public company peers in that general valuation range that command that kind of revenue multiple.
Investors in the SpaceX IPO need to be aware: every dollar of revenue that SpaceX generates will potentially be valued around ten times higher than where the stock market currently values a dollar of revenue generated by its mega-cap tech peers.
This is like buying a house in a neighborhood for ten times more per square foot than any other house on the block. It better be an extremely special house, or you will probably have trouble breaking even when you try to sell it.
A closer look at the pieces
We do not have great visibility into xAI’s financial performance. There are reports that it generated $500 million in 2025 and could be on a revenue run rate of a few billion per year in 2026.
The acquisition valuation was apparently $250 billion. If the IPO is valued at $1.75 trillion rather than the earlier $1.25 trillion valuation, the implied value of xAI (assuming it is marked up proportionately) will be along the lines of $350 billion.
Let’s assume for the moment that this grossed up $350 billion valuation is reasonable given the valuations applied to AI peers like OpenAI and Anthropic (which may also seek to tap the IPO market this year).
Backing xAI out of the equation, this still leaves some $1.4 trillion for the rocket launch business and Starlink.
The estimated revenue mix between these two businesses is approximately $12 billion for Starlink (which generates high margins, without taking into account depreciation or capital expenditures) and something like $3-$5 billion for the launch business (which likely runs closer to breakeven on profitability).
To value these two businesses at $1.4 trillion requires some heroic assumptions that are based on faith in what they can evolve into over time, rather than anything we see materializing in the real world today.
Starlink is fundamentally a telecommunications platform. These businesses are typically valued around 5 to 10 times revenue.
The launch business is fundamentally an aerospace/defense business. These businesses are typically valued around 2 to 5 times revenue.
A potential IPO valuation of $1.75 trillion implicitly values these two businesses at revenue multiples that are 10 to 15 times higher than typical peer multiples.
We are not arguing these businesses do not deserve a premium to industry peers. We are questioning how extreme this premium should be.
Are retail investors “the patsy”?
In poker, the patsy refers to the least knowledgeable player at the table. While the extension of the IPO into the retail world may be framed as democratization of access, it can also be viewed more cynically.
