SpaceX IPO: Potentially Millions of Retail Investors Will Make This Costly Mistake -- Don't Be One of Them
Key Points
SpaceX aims to raise $75 billion from its IPO and is seeking a valuation of $1.75 trillion to $2 trillion.
Retail investor buzz surrounding the SpaceX IPO is off the charts -- and rightfully so, with the space economy and artificial intelligence representing some of the largest long-term addressable opportunities.
However, retail investors have a terrible habit of being overzealous with Wall Street's largest IPOs.
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This year is shaping up as one of the most consequential in history for initial public offerings (IPOs). Artificial intelligence (AI) large language model developers OpenAI and Anthropic, which both sport estimated valuations in the neighborhood of $1 trillion, are contemplating going public before the year ends. Meanwhile, the largest expected IPO in Wall Street history, SpaceX, is right around the corner.
When SpaceX goes public, presumably in the second half of June, it'll likely command a market cap of $1.75 trillion to $2 trillion. This would make this space infrastructure and AI titan the eighth-largest publicly traded company on U.S. stock exchanges, slotting it ahead of Elon Musk's other trillion-dollar business, electric-vehicle maker Tesla (NASDAQ: TSLA).
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The hype surrounding SpaceX is palpable – so much so that up to 30% of the company's shares may be set aside for retail investors. Most IPOs portion 5% to 10% of shares for everyday investors.
Image source: Getty Images.
It's easy to be excited when several of SpaceX's puzzle pieces are growing at a breakneck pace. Space infrastructure and artificial intelligence are two of the largest addressable opportunities over the coming decade. When Musk's company files its registration statement (S-1), we'll get a true feel for just how fast SpaceX is growing.
Retail investors have a terrible habit of being overzealous with Wall Street's largest IPOs
But while SpaceX is drumming up plenty of interest for its historic debut, it's likely also luring potentially millions of retail investors into a costly mistake.
The $75 billion (or more) that SpaceX aims to raise from its IPO would be the most in history by a long shot. The current largest IPO recordholder is Saudi Aramco, which raised $29.4 billion from its overseas debut in December 2019.
In terms of capital raises, U.S. investors have witnessed a handful of big-time debuts since 1999, including Facebook (now Meta Platforms), Alibaba Group, Visa, General Motors, and United Parcel Service. With the exception of China's largest e-commerce and cloud infrastructure services platform, Alibaba, these other businesses are household names, and they generated a mountain of retail investor buzz before their respective IPOs.
Something else most of these companies have in common is that they sputtered out of the gate. Although Visa rallied 23% in the six months following its public debut, Meta, Alibaba, General Motors, UPS, and even Saudi Aramco, tumbled by 38%, 9%, 8%, 11%, and 15%, respectively, in the six months following their IPOs.
History has shown that investors have a terrible habit of being overzealous with brand-name IPOs, and there's a high probability this will be the case with SpaceX.
SPACEX HAS OFFICIALLY FILED FOR AN IPO.
-- amit (@amitisinvesting) April 1, 2026
SpaceX Revenue -- $15B, targeting a $1.75T valuation$META Revenue -- $200B, currently at a $1.45T valuation
Are you buying the SpaceX IPO?
Putting aside the well-known long-term growth prospects for the space economy and AI, SpaceX is trading at a triple-digit (and likely unsustainable) price-to-sales ratio, based on a January Reuters report that the company generated $15 billion to $16 billion in sales last year.
History also tells us that every game-changing technology and trend endures an early stage bubble-bursting event. If the space economy and AI follow the same pattern other next-big-thing trends have for more than three decades, SpaceX's valuation premium would be hard to justify.
Don't make the costly mistake of piling into SpaceX stock on day one. If you want exposure to the SpaceX growth story, history suggests you be patient and wait for the early overzealousness to wear off.
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Sean Williams has positions in Meta Platforms and Visa. The Motley Fool has positions in and recommends Meta Platforms, Tesla, United Parcel Service, and Visa. The Motley Fool recommends Alibaba Group and General Motors. The Motley Fool has a disclosure policy.
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