Based on several reports, the largest initial public offering (IPO) in stock market history, SpaceX, is less than three weeks from becoming a reality.
Elon Musk’s space and artificial intelligence (AI) conglomerate is seeking to raise approximately $75 billion and earn a $1.75 trillion valuation ahead of its expected June 12 debut. And thanks to recent rule changes by the Nasdaq exchange, SpaceX can be fast-tracked into the Nasdaq-100 after just 15 trading days.
Combining two of the hottest addressable markets on Wall Street — the space economy and AI — with Musk’s track record of outsize returns (shares of Tesla have soared over 26,000% since their June 2010 IPO) clearly has investors excited. But one dive into SpaceX’s prospectus (i.e., S-1 registration statement) should take the wind right out of its sails.
Admittedly, I wasn’t a fan of the offering prior to its S-1 being made public. But the SpaceX prospectus is far worse than I could have imagined.
SpaceX’s valuation is historically unjustifiable
For starters, history shows that every company at the forefront of a game-changing technology over the last three decades has topped out at a price-to-sales (P/S) ratio between 30 and 45 (with a little wiggle room at both ends). The key point being that P/S ratios above 30 for companies on the leading edge of Wall Street’s hottest trends aren’t sustainable.
SpaceX generated consolidated sales of $18.67 billion in 2025. If it snags a $1.75 trillion valuation, it would be trading at a P/S ratio of almost 94. Even at its roughly $1.5 trillion market cap on private-market trading platforms, its P/S ratio is still over 80.
Where’s the growth at xAI?
Perhaps the wildest realization from SpaceX’s prospectus is that xAI, the AI start-up responsible for building and training large language model Grok, which has a total addressable market of $26.5 trillion (including AI infrastructure), per the prospectus, is apparently getting its lunch eaten by OpenAI, Anthropic, and other AI start-ups.
According to CNBC, Anthropic is on pace for $10.9 billion in second-quarter sales after generating $4.8 billion in the first quarter. While Anthropic is delivering triple-digit sequential sales growth, SpaceX’s first-quarter sales were $818 million — up just 12.5% from the comparable period last year.
Latest xAI quarterly financials from the $SPCX IPO filing: $818m in revenue, $2.5bn in losses.
Grok and X sub revenue growing but ad revenue dropped during the quarter.
R&D obviously huge at $2.4bn.
Paid out $71m to creators during the quarter. pic.twitter.com/Ga7waXDpPG
— Wasteland Capital (@e-commerceshares) May 21, 2026
Even though Anthropic and SpaceX agreed to a compute partnership that’ll see the former pay the latter $1.25 billion per month, Anthropic (or SpaceX) can terminate the deal with a mere 90-day notice.
SpaceX’s smoke-and-mirrors accounting is an eyesore
Lastly, SpaceX’s financial statements contained a lot of perfectly legal accounting gymnastics to mask an ugly bottom line.
In particular, the prospectus points to the company’s steady string of positive adjusted EBITDA as an indicator of the sustainability of its multiple operating segments. But there’s a milewide gap between the $6.58 billion in positive adjusted EBITDA reported in 2025 and the actual $4.94 billion net loss SpaceX recognized.
SpaceX S-1 has been filed
LTM revenue of $18.7 billion with a 33.2% growth rate
EBIT loss of -$2.6 billion
Net loss of -$5 billion
At a $2 trillion valuation, will be trading at a 107x LTM revenue multiple
If added to the S&P 500, $SPCX will have the highest valuation,… pic.twitter.com/yxPDdahdQh
— Julian Klymochko (@JulianKlymochko) May 20, 2026
Depreciation and amortization from its capital expenditures-heavy approach, coupled with close to $2 billion in share-based compensation, collectively bridge $8.65 billion of this gap between adjusted EBITDA and net loss.
SpaceX isn’t close to being profitable, yet it profiles as possibly the most expensive megacap stock on Wall Street.
— Sean Williams
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Source: The Motley Fool
