Key insights
- SpaceX's upcoming IPO at $135 per share, aiming for a $2 trillion valuation and seeking to raise $75 billion, represents a significant event in the stock market. While the offering is heavily marketed and expected to generate substantial demand due to limited public float (5% of the company), the high entry price raises questions for retail investors. The IPO's success and subsequent trading performance could influence investor sentiment towards high-growth tech stocks and large-cap IPOs.
SpaceX (SPCX +0.00%) stock is set to launch on Friday at $135 per share in what's almost certainly going to be the biggest initial public offering ever. The stock is being heavily marketed through the company's roadshow and its IPO partners, including the underwriting investment banks and several online trading platforms.
If everything goes as planned, many SpaceX employees might become millionaires overnight, and Elon Musk could become the world's first trillionaire. But what about retail investors? At $135 a pop, is this a stock to consider?
SpaceX is aiming for a valuation near $2 trillion, and to meet that threshold, it wants to raise $75 billion. That's in addition to what the company is already worth privately. To make that happen, the company is issuing 555,555,555 shares to the public at $135 apiece.
How does it actually work? The company is already highly valued as a private entity. The part going to the public via the IPO represents only about 5% of the company's ownership, and the low supply is likely to drive high demand, which is why investors are willing to pay the high price.
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Typically, a company conducts an IPO roadshow to gauge what institutional investors think the stock would be worth on the open market. Management is doing its roadshow to build hype and boost demand, but it determined the $135 sell price early on.
As for the stock already owned by insiders, there are various lockup periods before they can sell. That helps create stability, since people who own shares that were originally worth something like $2 per share might be tempted to sell at the current price, which could flood the market and create an oversupply. According to the Wall Street Journal, pre-IPO SpaceX shares have gained 2,000% over the past few years.
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SpaceX has the retail investor in mind for the IPO, and it has earmarked more than 20% of the shares for retail investors, according to reports. Typical IPOs earmark 5% to 7% of shares directly to retail investors. Five years ago, Musk tweeted about it on what was then Twitter and is now his privately owned X social media app: "Will make sure they get top priority. You can hold me to it," he wrote.
But is this arrangement favorable for retail investors? At $135 per share, using the company's 12-month trailing revenue figures, shares will trade at 92 times sales. That's a hefty premium for a company demonstrating 15% year-over-year revenue growth and a $4.3 billion loss in the 2026 first quarter. IPOs alone add to a company's expenses, including stock-based compensation, and could keep it in the red a bit longer.
The average S&P 500 (^GSPC +0.33%) price-to-sales ratio is 3.7 right now, and even the Nasdaq-100, which is expected to have a higher average because the index is full of high-growth tech stocks, has an average price-to-sales ratio of 6.7.
Alas, it doesn't look like SpaceX stock is a good buy for retail investors at $135, considering its current financials. However, it's more about the valuation than the price tag. If sales increase, the company becomes profitable, and the valuation metrics become more reasonable, $135 might be a good price in the future.
If you're interested in buying SpaceX stock sooner, you might want to wait a few weeks and see if the price has come down. If you resist a bit longer, IPO prices generally come down even more as lockup periods end and more stock is sold by insiders.