Prediction: Some SpaceX IPO Investors Are About to Learn an Expensive Lesson

SpaceX's upcoming initial public offering (IPO) is set to become the largest IPO in market history, with a target valuation of nearly $2 trillion, and there's no shortage of excitement among investors.

Many investors are already buying indirect exposure to SpaceX pre-IPO, hoping to capitalize on the company before it even hits the market. Others are ready to invest the moment it goes public.

While nobody can say exactly what the stock will do in its first few weeks, I predict some investors will be in for a rude, and expensive, awakening.

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SpaceX's future is highly speculative

Much of SpaceX's valuation is built around speculation. The company's AI segment generated an operating loss of $6.36 billion in 2025, according to its recent S-1 filing with the Securities and Exchange Commission, and that was before SpaceX acquired xAI in February 2026.

Elon Musk also has lofty, and arguably unsustainable, goals for the company, including building data centers in space and establishing a permanent human colony on Mars. If SpaceX can achieve that, it will be a remarkable accomplishment. But for now, the company still has a lot to prove.

In more concrete terms, SpaceX's valuation has been raising eyebrows. The company posted $18.7 billion in revenue in 2025, according to its S-1 filing, and with a target valuation of around $1.75 trillion, its price-to-sales ratio for that period would be around 93.6. For comparison, Palantir Technologies, which currently has the highest valuation in the S&P 500 -- has a price-to-sales ratio of just over 79.

Fundamentals beat hype every time

This isn't to say that SpaceX is inherently a bad buy. However, it depends heavily on why you're investing.

The best investments have solid underlying business fundamentals and long-term earning potential. These companies have a clear path to profitability, a sustainable competitive advantage, and a leadership team with proven ability to guide the company through rough patches.

It's debatable whether SpaceX fits that bill right now, given how speculative much of its business plan is. But investors who believe in its fundamentals and are willing to hold the stock through volatility may choose to buy -- assuming it's part of a well-diversified portfolio.

On the other hand, there are investors buying solely on hype, hoping to make a quick buck. SpaceX could pop after it begins trading, but it might not. The 10 largest U.S. IPO stocks have underperformed the S&P 500 by a median 127 percentage points, according to FactSet Research, so history is not necessarily on SpaceX's side.

Before you invest in any stock, make sure you've studied the company's fundamentals and have reason to believe it will be a long-term buy. If you're only buying with the hope of earning a fortune overnight, you could end up sorely disappointed.

Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends FactSet Research Systems and Palantir Technologies. The Motley Fool has a disclosure policy.