Is the SpaceX IPO Officially Overhyped?

Space Exploration Technologies' (NASDAQ: SPCX) (SpaceX) initial public offering (IPO) was undoubtedly the most hyped IPO in recent stock market memory. It didn't disappoint, either, setting the record for the largest IPO in stock market history, with an initial valuation of around $1.77 trillion. Now, it's valued at over $2.1 trillion as of market close on July 2.

In the short time since its June 12 IPO, SpaceX's stock is relatively flat (from the price the average investor could have paid), experiencing roller coaster ups and downs. Still, there's a lot of hype surrounding both the company and the stock -- but is it overhyped? It depends on how you define it.

Image source: The Motley Fool.

SpaceX is going just beyond rockets

SpaceX is transforming from a rocket launch company into a respectable conglomerate with thriving subsidiaries under its wing. It has its core launch business, which is the largest in the world; Starlink is growing impressively and providing internet to some of the most remote places globally; and X's (formerly Twitter) parent company, xAI, has artificial intelligence infrastructure that many tech companies would give their right arm for.

Much of the appeal of SpaceX's business, however, is its ambitious plan for the future. Moonshot plans (no pun intended) like data centers in space and everyday human space travel spark the interest of investors and Elon Musk fans who see SpaceX's trajectory mirroring that of Musk's other company, Tesla. Tesla's returns have been just above the S&P 500's over the past five years, but it's up over 30,600% since its July 2010 IPO.

We can't predict how SpaceX's stock will perform, but it has businesses worth being excited about.

Is SpaceX's IPO overhyped?

If by overhyped, you mean that SpaceX is all promise and nothing to show, then I would say no, it's not. If by overhyped you mean extremely expensive for a business that is currently operating at a loss and built on (very) long-term promises, then I would say yes.

Taking SpaceX's $18.7 billion in revenue in 2025 and its $2.1 trillion valuation, it's currently trading at 112 times its sales (P/S ratio). For comparison, here are the P/S ratios for some notable companies and their year-over-year revenue growth last quarter:

Source: YCharts. P/S ratios as of market close on July 2.

These aren't apples-to-apples comparisons, but the larger point is how much of a premium you'd be paying for SpaceX's stock right now, even before seeing one quarterly earnings report as a public company.

This isn't a knock on SpaceX as a company by any means, but a great company doesn't always make a great investment. If you already own shares, I would hold onto them (you should be focused on the long term either way), but if you're thinking about making your first investment, I would wait it out a bit.

Stefon Walters has positions in Apple. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Broadcom, Nvidia, and Tesla. The Motley Fool has a disclosure policy.