Analysis
Unlike traditional value investors, I believe this stock's fundamentals and price performance will dramatically diverge in the short term. There are three main reasons why.
First, Tesla's fundamentals have deteriorated significantly, yet its stock price rose 28% over the past 12 months—driven almost entirely by hype around autonomous taxis and humanoid robots. I call it hype because these businesses currently contribute almost nothing to the bottom line.
Second, I expect this IPO to attract massive retail participation. In fact, reports suggest Elon may reserve up to 30% of shares for retail investors—an unusually aggressive allocation.
Third, I'm convinced retail investors will bid up the stock post-listing, and the xAI merger has fundamentally reframed the company's narrative from a mundane industrial/telecom story into a cutting-edge AI play. That narrative shift is powerful.
Reports indicate SpaceX plans to launch its roadshow around June 8th, with a retail investor presentation on June 11th attracting 1,500 participants, and a prospectus filing expected late May. What stands out: Elon reportedly plans to allocate 30% of shares to retail investors—vastly more than the typical 5-10% reserved in standard IPOs.
I expect post-IPO valuations to enter the stratosphere. Retail enthusiasm could drive the stock upward the same way CoreWeave's recent IPO experienced explosive gains. CoreWeave merely operates data center infrastructure on Earth. SpaceX's ambitions are infinitely larger.
In February 2026, SpaceX completed its acquisition of xAI, valuing SpaceX at $1 trillion and xAI at $250 billion. According to Reuters reporting on April 6th, the current IPO plans to raise $75 billion, with valuations potentially reaching $1.75 trillion.
Just weeks before the xAI merger was announced, SpaceX filed an application with the FCC to launch up to one million solar-powered satellites designed to construct an orbital AI data center. These satellites would integrate with SpaceX's existing Starlink laser mesh network. Users anywhere on Earth could submit requests to Grok (or other large language models), with computations executed in space at a fraction of terrestrial data center costs.
Some analysts project the space AI opportunity could reach multitrillion-dollar scale, potentially requiring around 3,000 Starship launches annually—roughly eight per day.
But there's a massive hidden problem: hardware refresh cycles. Nvidia's product iteration cycle runs about one year. Even assuming AI accelerator chips last five years, replacing all GPUs across the constellation at that pace would be extraordinarily expensive—even accounting for cooling and power savings. Matt Garman, AWS CEO, was blunt: orbital data centers are "far away from reality" and "not economically viable," citing rocket scarcity and payload cost constraints.
Long-term, space data centers may not be a high-margin business. But as a narrative, its valuation impact is undeniable—much like Tesla's humanoid robot story influences investor perception and therefore stock price. Strip away the xAI AI narrative, and SpaceX is just a rocket launch company plus a broadband service provider.
Reuters reports SpaceX achieved approximately $15-16 billion in 2025 revenue with roughly $8 billion in EBITDA, representing a 50-53% EBITDA margin. Starlink dominates the revenue mix, contributing 50-80% of total sales.
At the proposed $1.75 trillion IPO valuation:
The Saudi Public Investment Fund is reportedly considering a $5 billion anchor investment.
The critical variable is timing. My biggest near-term concern is that this IPO arrives amid softening risk appetite. Potential headwinds include escalating Iran tensions, weak March-May CPI prints, or negative credit market signals.
Based on disclosed roadshow schedules, SpaceX IPO timing is expected for late June through July 2026. By then, market risk appetite will likely resume its upward trajectory, with the S&P 500 poised to test new all-time highs.
Post-merger with xAI, the narrative transforms entirely. It's a compelling story—compelling enough to convince retail investors to pay extraordinary prices for fundamentally overvalued shares. Elon's plan to allocate 30% to retail (versus the standard 5-10%) signals confidence that retail enthusiasm will dominate pricing dynamics. I expect significant volatility and disconnection between valuation and fundamentals.
The bottom line: This isn't a value investment. It's a story bet where retail energy, AI momentum, and space exploration mystique collide with a $1.75 trillion price tag. Whether it works depends entirely on whether the broader market remains in "growth at any price" mode when this hits the market.
Risk Disclaimer: This article represents the author's personal views and does not constitute investment advice. All investments carry risk, including potential loss of principal. SpaceX shares would be subject to significant volatility and valuation risk. Readers should conduct their own due diligence and consult with qualified financial advisors before making investment decisions.