Bulls are optimistic about the robust AI computing power of SpaceX's data centers and the long-sought prospect of a merger with Tesla, viewing this IPO as a 'double-down' buying opportunity akin to NVIDIA’s early growth phase; bears, however, argue that its valuation is excessively inflated and that the stock remains unprofitable, asserting that a 53% discount would represent fair value. Amid surging retail investor participation, early unlocking of lock-up shares, and the historical tendency of mega-IPOs to drain market liquidity, this landmark listing could trigger significant volatility in U.S. equities.
The largest IPO in history is about to debut, but the controversy surrounding its pricing is equally unprecedented. Optimists compare it to NVIDIA’s historic early entry window, while pessimists, using financial models, argue that the current price already implies an overvaluation of more than 50%.
$Space Exploration Technologies (SPCX.US)$ Scheduled to begin trading on Nasdaq this Friday (June 12) under the ticker symbol SPCX, with an offering price of $135 per share, the IPO aims to raise approximately $75 billion and will value the company at $1.77 trillion post-listing—setting a new global record for the largest initial public offering. Wall Street is now sharply divided over this stock in an unusually intense debate: bulls view it as a once-in-a-generation investment opportunity, while bears argue investors are paying a $72 'option premium' for Elon Musk’s grand vision.
Dan Ives, senior analyst at Wedbush Securities, characterizes this IPO as 'a pivotal moment in the advancement of the AI revolution' and believes the probability of a merger between SpaceX and Tesla exceeds 80%, which could give rise to a Musk-led business empire encompassing core assets of the AI ecosystem. In contrast, Nicolas Owens, an analyst at Morningstar, assigns a fair value of only $63 per share—53% below the offer price—arguing that the current valuation largely reflects speculative bets on high-risk projects such as orbital data centers rather than a rational assessment of realized business operations.
The market impact of this IPO has already begun to materialize. On Tuesday, the Nasdaq Composite Index dropped as much as 4% intraday before narrowing to a 1% decline at the close; on Wednesday, it fell nearly 2% again during trading. Concerns persist that this mega-IPO will absorb significant market liquidity. Additionally, approximately 30% of the IPO shares will be allocated preferentially to retail investors—far exceeding the typical allocation range of 5% to 10%. Coupled with rule changes by both the Nasdaq 100 and Russell indices to fast-track SpaceX’s inclusion, this listing will profoundly affect millions of ordinary retirement account holders invested in index funds.
The Largest IPO in History: The Narrative of Losses Behind High Growth
SpaceX is offering approximately 556 million shares in this public offering, representing slightly more than 4% of its total outstanding shares, raising roughly $75 billion and achieving a valuation of $1.77 trillion—surpassing Tesla ($1.5 trillion), Meta ($1.4 trillion), and Berkshire Hathaway ($1.04 trillion).
The company’s fundamentals exhibit a classic profile of high growth coupled with high losses: revenue reached $18.67 billion in 2025, up 33% year-over-year, yet net losses amounted to $4.94 billion over the same period. Based on the offer price, the price-to-sales ratio stands at approximately 94x.
This IPO has already been oversubscribed, indicating that demand exceeds the number of shares SpaceX is willing to sell at the offer price. Significant price volatility may therefore occur on the first day and in the initial trading days. Currently, perpetual futures contracts for SpaceX on Hyperliquid are quoted at around $155, implying an approximate 15% upside relative to the $135 offer price.
Bull Case: AI Infrastructure and the Tesla Merger Narrative
At the heart of Dan Ives’ bullish thesis is SpaceX’s tangible progress in AI infrastructure. The company’s Colossus data center in Memphis, Tennessee, integrates 220,000 top-tier NVIDIA GPUs and can deliver over 300 megawatts of AI computing power.
This hardware advantage has already translated into substantial commercial contracts. According to previously disclosed IPO filings, SpaceX signed an AI computing power lease agreement with Google worth approximately USD 920 million per month; Anthropic agreed to pay USD 1.25 billion per month for exclusive access to the Memphis Colossus 1 facility’s computing capacity through May 2029, amounting to a total contract value exceeding USD 40 billion.
On the capital operations front, Ives noted that SpaceX’s acquisition of xAI in February this year converted Tesla’s USD 2 billion investment in xAI into SpaceX shares, thereby establishing an equity linkage between the two companies. He believes that if SpaceX and Tesla ultimately merge, Elon Musk would gain control over a more comprehensive segment of the AI ecosystem, achieving what he calls a 'holy grail' integration.
Bear Case: A 53% Discount and the Orbital Data Center Bet
Nicolas Owens of Morningstar proposed a markedly different valuation framework. In his research report released Monday, he set SpaceX’s fair value at USD 63 per share, implying that roughly USD 72 of the current offering price of USD 135 represents an 'option premium' paid by investors for ambitious projects that have yet to materialize—and may never do so—primarily including the orbital data center and Mars base initiatives.
Owens defines his base-case scenario as the 'minimum viable product,' assigning it a 50% probability: the orbital data center proves technically feasible but faces scalability constraints, allowing SpaceX to capture approximately 4% of the projected global AI computing capacity and generate around USD 47 billion in annual orbital AI revenue by 2035.
He assigns a 43% probability to a bearish scenario: the orbital data center fails to materialize or proves uncompetitive on cost relative to terrestrial alternatives. Owens argues that under such circumstances, the company could abandon the project around 2028, similar to how Tesla previously scrapped plans for several small vehicle manufacturing plants. If this occurs, the valuation would contract significantly.
Only under the most optimistic scenario—in which the orbital data center not only proves feasible but also offers superior cost efficiency compared to ground-based solutions—would the company’s valuation reach USD 1.97 trillion, or USD 154 per share, slightly above the offering price. Owens acknowledged that SpaceX may be the only company globally capable of achieving this outcome, though significant scientific uncertainties regarding its feasibility remain.
Aswath Damodaran, Professor of Finance at New York University, estimated the company’s enterprise value at USD 1.22 trillion, while conceding that a valuation of USD 1.75 trillion under extremely optimistic assumptions is not entirely unfounded—though this presumes SpaceX captures a meaningful share of the enterprise AI market and that the broader space launch industry expands rapidly over the next decade.
Historical Warning: Mega IPOs Often Suffer Post-Listing Declines
Although institutions such as The Motley Fool argue that SpaceX currently exhibits a 'double down' buying signal reminiscent of NVIDIA during its low-profile phase in 2009, historical data has been unfavorable toward mega IPOs. Truist’s analysis shows that among the 30 largest tech IPOs over the past 15 years, the average peak-to-trough decline during the first year of trading was a staggering 55%, with more than half of the companies posting negative returns one year after their debut.
Jay Ritter, a professor and IPO research expert at the University of Florida, has compiled a broader dataset—his study of over 9,200 IPOs from 1980 to 2024 shows that investors who bought at the first-day closing price experienced an average market-adjusted return of -21% over three years. "The average first-day gain for IPOs is about 19%," Ritter told CBS News. "So whether you buy at $135 or $165 makes a significant difference in ultimate returns."
According to Motley Fool, the weighted average return of 1,724 stocks that went public between 2011 and 2024 was -1.7% one year after listing. For more mature companies like SpaceX—which has been in operation for 24 years and generates tens of billions of dollars in annual revenue—the historical track record is even less favorable.
Sam Grelck of Truist also noted that short-term performance tends to outperform long-term results: returns are relatively strong in the first week to three months post-listing, but as the time horizon extends to one year or more, pullbacks and negative returns begin to emerge. "We don’t know exactly how it will play out, and there are exceptions," he said. "Maybe SpaceX will perform well and avoid a significant pullback."
Retail Investor Influx and Passive Index Buying
One distinctive feature of this IPO is the unusually high level of retail investor participation. Approximately 30% of the IPO shares were allocated to retail investors—far exceeding the typical range of 5% to 10%—and several online brokerages have significantly lowered the barriers for individual investors to subscribe at the offering price.
However, greater retail participation may also introduce additional stock price volatility. Grelck pointed out that when a company’s growth falls short of expectations, retail investors tend to sell outright more readily than institutional investors, who are more likely to hold their positions and wait.
On the other hand, index inclusion mechanisms will generate passive buying support. The Nasdaq-100 Index recently revised its rules to allow SpaceX to be added within 15 trading days of its listing. This means holders of the popular QQQ ETF, which tracks the index, will automatically become SpaceX shareholders. Similarly, the Russell family of indices permits SpaceX to be fast-tracked for inclusion just five trading days after listing. "A substantial amount of capital tracks these indices," Grelck said. "As SpaceX enters these benchmarks, systematic buying could provide some degree of price support."
Lock-Up Arrangements: A Hidden Variable for Volatility Risk
Another noteworthy detail of this IPO is SpaceX’s unconventional lock-up period arrangement. Unlike the standard practice requiring insiders and early shareholders to wait 180 days post-listing before selling shares, SpaceX allows certain investors (excluding Elon Musk himself) to sell a portion of their holdings just weeks after the IPO, with additional tranches unlocked incrementally through December.
Owens believes this structure implies that the market will face persistent potential selling pressure over the next six months. Even if actual selling remains limited, the market may preemptively price in these expectations, leading to proactive selling ahead of each unlock date and triggering periodic pullbacks.
Moreover, the 556 million shares issued represent only approximately 4% of the company's total outstanding shares. As early investors gradually unlock and monetize their holdings, sell-side supply in the market will continue to increase. Even if passive index buying provides some offsetting demand, the downward pressure on the stock price remains significant, Owens concluded.
"We believe that long-term investors eager to participate in SpaceX’s future opportunities will find better entry points—with greater margin of safety than the current offering price—after the initial offering," Owens said.
Editor/Lambor