SpaceX IPO: 2 Crucial Things All Investors Need to Know Right Now

At this point, nearly every investor, even those only glancingly familiar with the SpaceX (NASDAQ: SPCX) IPO, knows the big headlines about the company. It has a nearly $1.8 trillion valuation from the get-go, an IPO price of $135 per share, it has instant status as the most heavily capitalized private space company, and so on.

But to my mind, it's crucial for anyone considering buying into this hot new stock to bear two critical things in mind, enumerated below. I should note before we dive in that no investor should ever buy a stock based purely on hype, excitement, or the good old fear of missing out (FOMO). Also, there are numerous ways to gain exposure to SpaceX besides directly purchasing its shares.

Image source: Getty Images.

1. It's far more than just a space exploration company

It's absurd that a pure-play space business should be valued just south of $2 trillion. However, SpaceX CEO Elon Musk and his team were smart to bulk the company up with other assets, some of which have notable potential.

There's artificial intelligence (AI) developer xAI, which hasn't only developed the popular AI model Grok but also holds a significant physical asset in the huge Colossus 1 data center in Tennessee. Colossus is set to meaningfully contribute to its parent company's fundamentals by supplying peer/rival Anthropic with some of the processing power it needs for a cool $1.25 billion per month.

X, formerly Twitter, is also entirely under the SpaceX canopy. X remains a high-profile social media platform with a monthly average user (MAU) count, including Grok users, of roughly 550 million. Collectively, those folks publish roughly 350 million posts of various kinds each day.

Also in the portfolio is Starlink, SpaceX's operating division. This satellite-based communications and broadband company is focused on both corporate and individual users, while its sibling Starshield is aimed at government and military clients. A prized asset for Starlink is 65 megahertz of high-value direct-to-device (D2D) spectrum, for which it holds exclusive rights to airwaves within the lucrative U.S. market.

2. The valuations will be ... unusual

Unusually high, that is.

At that $135-per-share price, SpaceX's pre-IPO multiples are lofty. Its price/sales ratio is a very rich 95. And despite that formidable collection of space, tech, and telecom assets, the price/book ratio is towering at over 42 (though with that IPO cash, it should fall considerably).

To put it mildly, these don't compare anywhere near favorably with some of the most powerful publicly traded companies on the scene.

For example, AI processor king Nvidia has a price/sales of 20, and a price/book that sits comfortably under 26. Everyone's favorite cool-gadget stock, Apple, can be purchased at a price/sales ratio below 10. Even its rich price/book of 40 is (slightly) lower than the pre-IPO SpaceX. Finally, elsewhere in Musk-land, the two valuations for Tesla are 14 and 18.8, respectively.

That gap between SpaceX's figures and those of many prominent companies is stark and significant, and it means investors will expect Musk's baby to grow at hot rates in the coming quarters and years. I think it's wise never to underestimate this often-erratic entrepreneur and his ideas, particularly when they're backed by a very attractive lineup of assets. But it'll be challenging to satisfy such high hopes. Buyer, beware.

Eric Volkman has positions in Apple. The Motley Fool has positions in and recommends Apple, Nvidia, and Tesla. The Motley Fool has a disclosure policy.