SpaceX: To Buy or Not to Buy?

News Analysis

The initial public offering of 555,555,555 shares in Elon Musk’s SpaceX, priced at $135 per share, will raise $75 billion. This pricing gives the company a market value of $1.77 trillion, making SpaceX one of the world’s 10 most valuable companies and making this the largest IPO in history.

Stock analysts who say “buy” believe that the company is building a dominant position in aerospace transport and communications, and focus on Musk’s record of delivering on his innovative visions, such as Tesla. Those who say “stay away” argue that the company is betting too heavily on artificial intelligence (AI), where it’s trailing the competition, and that its financials don’t come close to justifying the valuation.

Public trading of the shares begins on June 12, and many investors are deciding whether a company that is currently unprofitable is worth such a high price. In attempting to value SpaceX, one of the first questions is, what is it?

According to its S-1 filing, SpaceX is “the most ambitious, vertically integrated innovation engine on (and off) Earth with unmatched capabilities to rapidly manufacture and launch space-based communications that connect the world, to harness the Sun to power a truth-seeking artificial intelligence that advances scientific discovery, and ultimately to build a base on the Moon and cities on other planets.”

In more pedestrian language, SpaceX is essentially a three-legged conglomerate that includes an aerospace and defense company, a satellite communications business—Starlink—and xAI, which is developing artificial intelligence—including the Grok chatbot—and building AI infrastructure on terra firma and in space, according to Morningstar’s tech analyst Nicolas Owens. Musk also rolled his social media company, X, into xAI.

In 2005, the aerospace business generated $4 billion in revenue, Starlink generated $11 billion, and the AI business generated $3 billion, Owens noted in a June 8 Morningstar interview. Regarding net income, SpaceX lost nearly $5 billion overall last year.

The $1.7 trillion valuation for SpaceX implies that the company is worth 93 times its top-line revenue.

For perspective, this compares to a price-to-sales valuation for Amazon of 3.9 times, for Alphabet (Google) of 10.5 times, and for Apple of 9.6 times. Palantir, which provides AI technology and software to the U.S. government and generated $870.5 million in net income in the first quarter of 2026, trades at about 65 times sales.

So, is SpaceX worth $135 per share? First, the positives.

The Case for Buying SpaceX

Analysts point to rapidly growing revenues in key business lines, together with first-mover advantages over competitors.

“The first two [business lines], the rockets—the actual designing and making of the rockets and launching them—and the Starlink business—which uses satellites that are lifted on the SpaceX rockets—we believe those have a cost advantage, and that’s one of our core moat sources,” Owens stated. Starlink, he said, “is really a money spinner, and we see a very highly profitable growth coming out of there for years.”

A “moat,” in investment parlance, is a company’s long-term structural advantage to defend its market share against competitors.

Renowned tech investor Chamath Palihapitiya called SpaceX “probably the most important internet infrastructure project that’s happened since the internet itself, that’s going to scale to hundreds of millions of users.”

Speaking on the All-In Podcast, Palihapitiya said the company offers a delivery infrastructure that will grow at a double-digit rate. This combined with the AI business, which includes both the apps and the computing capability, will deliver revenues of $40 billion–$45 billion over the next year and double that the following year, he predicted, bringing the price down from more than 90 times revenue to about 20 times.

Several recent developments appear to support this thesis.

In May, just prior to the IPO, it was announced that xAI—which lost $2.5 billion in the first quarter of this year while its chatbot, Grok, struggled to compete with competitors Claude, Gemini, and ChatGPT—had signed a deal in which Anthropic would pay $1.25 billion a month to rent xAI’s Colossus 1 data center for three years. On June 5, it was further announced that Google had also signed a three-year deal with SpaceX for $920 million a month, although both deals included 90-day cancellation clauses.

Many investors also buy in to Musk’s track record as a visionary who can deliver, as evidenced by his electric car company, Tesla, which Musk built into the world’s largest electric vehicle maker, until it was overtaken by China’s BYD in 2025.

“Why can you buy a company like this on revenue versus earnings and cash flow?” Palihapitiya said. “Because what the revenue does is it gives him the operating leverage to go and invest in all of these other businesses that ultimately consolidate his differentiation and his competitive moat, because what he creates is a capital moat that then accelerates a technology moat that then accelerates an execution and a learning moat.”

And then there’s the technical upside for SpaceX shares. CNBC “Mad Money” host Jim Cramer argued that, because only about 4 percent of the company is being offered to the public and because index funds will soon be required to buy the shares, the demand could overwhelm the supply, causing shares to more than double in value.

The Case Against Buying SpaceX

Skeptics say SpaceX is betting on speculative AI ambitions at the expense of its profitable aerospace business.

SpaceX’s S-1 states, “We believe we have identified the largest actionable total addressable market (‘TAM’) in human history,” which it estimates is $28.5 trillion, much of which doesn’t yet exist.

More than 90 percent of SpaceX’s target market is AI-related, and about 60 percent of the company’s capital expenditures are going toward AI. Critics argue that SpaceX’s AI offering, Grok, has been an “also-ran” among its competitors, with one analysis estimating that Grok currently has approximately 50 million active users compared with market leader ChatGPT, which has about 800 million.

The S-1 filing states that Grok’s market share is currently only 3.4 percent of the AI market, and AI has thus far been a loss-making business for SpaceX. The only component of SpaceX that is currently profitable is the satellite internet business, which the company appears to be leveraging to finance its AI ventures.

SpaceX’s deal to rent its xAI Colossus 1 data center to Anthropic, while it brings in revenue, is dedicating much of the company’s infrastructure to an AI competitor, critics say.

Owens and Morningstar director Suryansh Sharma estimated that SpaceX’s value is about $780 billion, less than half the IPO valuation. The company’s value, they stated, was largely driven by its launch and satellite communications businesses, but that its AI segment “poses a material threat of value destruction to the company.”

And there are concerns regarding the IPO itself.

Ben Felix, chief investment officer at PWL Capital, stated in an online blog that leading up to the offering, SpaceX was “pushing for two things: rule changes that will allow near immediate inclusion in major stock market indices, and heavy retail participation in the IPO.”

Whereas institutional investors typically get 90 percent to 95 percent of IPOs, leaving only 5 percent to 10 percent for smaller investors, SpaceX plans to sell about 30 percent of its shares into the retail market.

Retail investors can buy through Charles Schwab, Fidelity, Robinhood, SoFi, and Morgan Stanley’s E-Trade. At Fidelity, investors can buy SpaceX with as little as $2,000 in their accounts, down from minimums of $100,000 for other equity offerings.

While this allows more retail investors to get in early on SpaceX, it may leave many wondering why they are being offered such a good deal.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.