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SpaceX is not one company – it is a rocket launch business, a satellite internet empire, and an AI business, all wrapped as one and priced as though each piece will dominate its respective market.John Raoux/The Associated Press
J. Ari Pandes is an associate professor of finance and an associate dean at the University of Calgary’s Haskayne School of Business.
The markets are partying like it’s 1999. Or maybe early 2000, just before the music stopped. SpaceX is slated to go public on June 12, targeting a valuation of $1.75-trillion and aiming to raise $75-billion, making it the largest IPO in history. And that is just the opening act.
OpenAI is preparing to list at roughly $1-trillion and has filed confidentially with the SEC. Anthropic, which just closed a private round valuing it at nearly $1-trillion as well, has also filed confidentially with the SEC and could list as early as October. This IPO pipeline alone represents more combined value than the entire U.S. IPO market has produced in years. Being public seems to be cool again, at least in the U.S., and frankly, the shrinking public markets could use the jolt. Go ahead and enjoy the party, but just know what you are getting into.
SpaceX is not one company – it is a rocket launch business, a satellite internet empire, and an AI business, all wrapped as one and priced as though each piece will dominate its respective market. Starlink is a cash machine, but the AI business is swallowing the profits. According to the prospectus, the combined company posted a net loss of $4.94-billion on $18.7-billion in revenue in 2025, and burned another $4.28-billion in just the first quarter of 2026. At $135 a share, SpaceX would trade at roughly 94 times its 2025 revenue on day one.
Analysis: SpaceX’s lofty valuation set to put ‘Elon premium’ to test
Reasonable people can disagree on the valuation number. What is harder to disagree with is that the gap between the bull case and the bear case is wide, and that uncertainty lands on whoever is holding the stock.
If this feels familiar, it should. Jay Ritter, the University of Florida finance professor widely known as “Mr. IPO,” has spent four decades studying what happens to investors who buy into the excitement. His seminal 1991 paper found that in the three years after going public, IPO firms on average significantly underperformed comparable companies. The IPOs returned 34.5 per cent while a matched control group returned 61.9 per cent over the same period.
The underperformance was most severe in high-volume, high-enthusiasm markets – what Prof. Ritter called windows of opportunity, when firms are best positioned to go public and investors are least positioned to push back. His updated data makes the point even sharper: Among companies with more than $100-million in sales that came to market at more than 40 times trailing revenue, 12 of 14 subsequently underperformed the market over the next three years. SpaceX is coming to market at roughly 94 times trailing revenue. OpenAI, which is projecting losses through the end of the decade, and Anthropic, which is still burning cash despite rapid revenue growth, will not be far behind.
Opinion: Don’t buy the SpaceX IPO just because you can
And then there is the retail angle. SpaceX is allocating roughly 30 per cent of its float to retail investors – much larger than the normal 5 per cent on large IPOs. Retail investors can get into the party through their brokerages. Elon Musk has fostered a cult-like following among retail investors, and SpaceX wants to reward that. But consider what retail investors are actually being invited to fund: AI infrastructure losses running at $2.5-billion a quarter, an unproven orbital data-centre strategy, and a business that by its own admission will require tens of billions in additional capital expenditure before it turns profitable.
None of this means these are bad companies. And we should be rooting for them, and for the public markets revival they represent. The dot-com era produced extraordinary companies too, among them Nvidia Corp. At the same time, it left millions of ordinary investors nursing multiyear losses on names that turned out to be worth far less than advertised. The best parties usually end the same way – with a hangover for those who did not know what they were getting into.
Buyer beware.
