Key insights
- The author expresses a bearish outlook on the SpaceX IPO (SPCX) due to its extremely high opening valuation of 95x price-to-sales, despite impressive business fundamentals and revenue growth. The analysis projects a potential 11% decline in valuation over two years even with optimistic assumptions and flawless execution, further compounded by significant annual cash burn and net losses. The author plans to wait for insider lock-up expiry, anticipating a more realistic price reflecting the company's financial realities.
Everyone is excited about the spacex IPO opening on nasdaq tomm at $135 a share, i get it that the business is genuinely impressive like it does US space launches, starlink and revenue is growing at 33% year on year. After the xAI merger you are also getting grok and the X platform under one ticker and is available as fractional shares on bitpanda. The story writes itself.
But this is why I got off the train,i will be sharing lots of numbers so prepare urself,at $1.77 trillion and $18.67 billion in 2025 revenue, SPCX opens at 95x price to sales. Lets be generous and assume 30% revenue growth for the next two years,it gets you to roughly $31.5 billion in revenue by end of 2027. even if the market still gives it a frothy 50x multiple at that point which would already be among the highest of any public company and the valuation would be around $1.58 trillion and thats an 11% decline from today's IPO price two years from now in a best case scenario that requires flawless execution.
And thats before accounting for the $30 billion annual cash burn, the $4.94 billion net loss in 2025 or the fact that one man with 85% of the votes and zero accountability to the board
I like SpaceX as a company but i just dont like it at this price on day one so i will be waiting for the lock up expiry in six months when insiders can sell and the price actually reflects reality. Might look stupid if it rips but i am fine with that.
Am I missing something here or is the valuation just genuinely indefensible at open?
Not financial advice.