The largest IPO in history just launched its roadshow. Here’s what Wall Street keeps getting wrong about it.
Let’s start with the number everyone is arguing about.
SpaceX filed its S-1 on May 20, launched its investor roadshow Thursday, and set a fixed price of $135 per share — raising $75 billion at a $1.75 trillion valuation. The previous record was Saudi Aramco’s $29 billion raise in 2019. SpaceX is targeting 2.5 times that record in a single offering.
Morningstar’s analysts ran the numbers and arrived at a fair value of $780 billion — roughly 55% below the asking price. That’s not a rounding error. That’s a different galaxy.
So who is right? The answer is: neither side is asking the right question.
You Are Not Buying One Company. You Are Buying Three.
This is the central confusion driving the entire valuation debate. The ticker is SPCX. The S-1 shows $18.7 billion in 2025 revenue. But that single revenue figure represents three completely different businesses with three completely different financial profiles — bundled together and sold as one number.
Business 1 — Starlink (Connectivity): $11.4 billion in 2025 revenue, up 49.8% year-over-year. Subscribers more than doubled from 5 million to 10.3 million in twelve months across 164 countries. Adjusted EBITDA of $7.168 billion, growing 86.2%. This is the cash cow. This is the business that funds everything else.
Business 2 — Space (Rockets and Starship): $4.086 billion in revenue, operating loss of $657 million. SpaceX spent over $3 billion on Starship research and development in 2025 alone, with another $930 million in Q1 2026. Starship V3’s maiden flight has been completed. This is a long-duration capital allocation bet on human space travel.
Business 3 — xAI (Grok and Colossus): The February 2026 merger with Elon Musk’s AI startup turned a profitable company into a loss-making one overnight. In 2024 — before the xAI merger — SpaceX posted a net income of $791 million. After the merger: a $4.94 billion net loss in 2025. Q1 2026 alone: $4.28 billion in net losses in a single quarter. xAI/AI operations burned $6 billion in 2025 and $2.5 billion in just the first quarter of 2026. The accumulated deficit now sits at $41.3 billion.
You are paying $1.75 trillion for a satellite internet business, a rocket program, and an AI platform that collectively lost $4.94 billion last year after losing $4.28 billion in the first three months of this year.
The Warning Sign Inside Starlink’s Numbers
Starlink is genuinely extraordinary. Doubling subscribers in twelve months. $11.4 billion in revenue with 86% EBITDA growth. The anchor of the entire valuation case.
But read one level deeper and there is a number worth watching carefully.
Starlink’s average revenue per user fell 23% year-over-year. Subscriber growth is doing the heavy lifting while per-user economics are softening — driven by Starlink pushing into lower-priced international and consumer markets. The business is growing fast. The unit economics are moving in the wrong direction. At current pricing trajectory, the question of whether Starlink reaches $25 billion in annual revenue by 2028 or plateaus somewhere below $20 billion is not settled.
The S-1 Details That Most Coverage Isn’t Mentioning
Three items buried in the filing that professional investors are focused on:
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The $3.75 billion that can be sold on day one. All primary shares means proceeds flow to SpaceX, and existing shareholders including Musk cannot sell for 366 days. But there is a carve-out: 5% of shares was allocated to “certain employees and persons and friends and families of executive officers” with no lockup restriction at all. At a $1.75 trillion valuation, that carve-out is worth approximately $3.75 billion in stock that hits the open market on the first day of trading.
The Anthropic contract is not recurring SaaS revenue. SpaceX’s Colossus 1 data center — 220,000 Nvidia GPUs, 300 megawatts of power, built in 120 days — secured a deal with Anthropic worth $1.25 billion per month through May 2029. The lifetime value of that contract is approximately $40 billion. But either party can terminate it with 90 days’ notice. That is a large revocable purchase order, not a locked subscription contract. Treat it accordingly.
Dual-class shares mean you have no vote. Class A shares for the public carry one vote. Class B shares held by Musk carry ten votes. Buying SPCX is a bet on Musk’s judgment, not a seat at the table where that judgment gets exercised.
The One Number That Changes The Entire Analysis
Here is what the valuation debate is missing entirely.
On May 1, 2026, Nasdaq put a new rule in effect: any newly public company ranked in the top 40 by market capitalization can enter the Nasdaq-100 after just 15 trading days — eliminating the previous three-to-twelve-month seasoning requirement and removing the old 10% minimum float rule. SpaceX at $1.75 trillion immediately ranks among the five largest companies in the world.
SpaceX begins trading June 12. Nasdaq-100 eligibility triggers around July 6.
Analysts estimate that QQQ alone will be forced to purchase approximately $7 billion in SpaceX shares on a single day. Total forced buying across S&P 500 and Nasdaq-100 index funds is estimated between $22 billion and $27 billion — with broader passive ecosystem estimates reaching above $200 billion across all indices over time.
Now consider the float. SpaceX’s public float is estimated at 2.86% to 3.75% of total shares outstanding. That is one of the lowest public floats of any mega-cap listing in history. Tens of billions in forced mechanical buying chasing a float of under 4%. That is not a valuation call. That is a supply and demand equation — and every passive investor in America is already on the forced-buyer side whether they know it or not.
If you own VOO, IVV, SPY, or QQQ, you will own SpaceX automatically. The only question is whether you want more exposure than your passive baseline.
The Bottom Line
Morningstar is right about the intrinsic valuation. At $1.75 trillion, you are paying 93 times 2025 revenue for a company that lost $4.94 billion last year. Even a generous sum-of-parts — Starlink at 30x revenue ($342 billion), Space at 10x ($40 billion), xAI comparable to a top-tier private AI lab ($200 billion) — gets you to roughly $580 billion, below Morningstar’s own estimate.
Wall Street is right about the mechanics. $22 to $27 billion in forced passive buying hitting a float of under 4% creates a technical floor that has nothing to do with discounted cash flows. The stock can trade well above intrinsic value for a sustained period purely because index rules require it.
The SpaceX IPO is not a question of whether the company is great. It is. It is a question of whether the price reflects the business or reflects the mechanical demand that index rules have guaranteed regardless of what the business is worth.
One of those factors disappears after the forced buying clears. The other one doesn’t change until the financials do.
Disclaimer: We do not hold any positions in the above stock(s). Read our full disclaimer here.
