The SpaceX IPO: Why We’re Not Buying the Hype

We don’t usually build an episode around a single headline, but this one was too well-timed to skip: SpaceX’s IPO landed with a projected valuation of roughly $1.75–1.8 trillion — about 20% higher than Meta, a company with over a decade of proven profitability behind it. SpaceX, by contrast, hasn’t posted a profitable quarter. That gap between hype and fundamentals is exactly whatthis episode digs into.

What’s actually happening

An IPO — initial public offering — is simply the moment a private company becomes available for public investors to buy shares in for the first time. SpaceX has existed for years as a private company, accessible only to insiders and private equity; the IPO opens it up to everyone else.

The numbers behind the offering are eye-catching on their own. At the proposed share price, SpaceX was set to launch at somewhere around 92 times its projected sales —compare that to Nvidia, itself considered richly valued, trading closer to 22times sales. For context on how fast sentiment was moving, SpaceX’s valuation was estimated at around $800 billion as recently as December — meaning it roughly doubled in a matter of months, with no corresponding jump in profitability to explain it.

Hype, not fundamentals

When a company isn’t profitable and its valuation is still climbing that fast, the honest question is what’s actually driving the number — economics, or sentiment. In SpaceX’s case, it’s hard to argue it’s the former. A lot of the enthusiasm traces back to Elon Musk’s track record with Tesla, and a bet that lightning strikes twice. (For what it’s worth, SpaceX’s IPO prospectus reportedly ties part of Musk’s compensation to getting a million people living on Mars — which tells you something about how far outside normal valuation math this conversation already sits.)

You’ll probably own a piece of it eventually — just not right away

If SpaceX becomes a genuinely dominant company, most long-term investors will endup with exposure to it through a diversified portfolio — but not immediately.To join the S&P 500, a company needs to meet specific criteria, includingmultiple consecutive profitable quarters; SpaceX likely won’t qualify untilsometime in 2027 at the earliest. Other indices — the Russell, NASDAQ, andMSCI-based indices among them — have different, often faster rules, and couldadd some SpaceX exposure within days of the IPO. The takeaway: broad indexexposure to a newly public company isn’t instant, and it isn’t uniform acrossthe market.

What the data says about buying IPOs

Here’s the part that should matter more than any single company’s story: IPOs, as a category, have a rough track record. Looking at data from 1980 to 2024, the median first-day pop for a new IPO is about 18.8% — but that early excitement fades. The average three-year return across that same 44-year period is negative20.5%, and roughly two-thirds of IPOs lose more than half their value within three years.

Facebook is a useful case study, not because it turned out badly — it’s now one of the largest companies in the world — but because of what happened in between. Facebook’s stock dropped roughly 50% in the four months after its 2012 IPO, and took over a year just to climb back to its original IPO price. Anyone who bought on day one and held for the long run has done extremely well. Anyone who traded in and out along the way likely didn’t — and that’s the more common outcome.

Our take

We’re genuinely curious to see what SpaceX becomes — it’s a fascinating company doing a fascinating thing. But curiosity isn’t an investment thesis, and the data on IPOs doesn’t support lining up on day one, even for someone comfortable with speculation. If SpaceX does eventually earn a place among the market’s largest companies, a globally diversified, long-term portfolio will pick up that exposure naturally, on the market’s own timeline — without betting on a single, unprofitable company at its most hyped, most expensive moment.

Investing, done well, should be a little boring. This isn’t that. Which is exactly why it made for a fun episode — and exactly why it’s not where our own money is going.

Listen to episode 036 of The Chiro Money Show →

‍