SpaceX Eyes $1.8 Trillion Valuation in Record-Breaking IPO

AOL.com reported Wednesday that Elon Musk’s SpaceX is seeking a valuation of up to $1.8 trillion as it prepares for what would be the largest public debut in Wall Street history. The company is looking to raise as much as $86 billion in the offering. Not everyone is convinced the price tag is justified.

“Mr. IPO” Raises Valuation Concerns

University of Florida finance professor Jay Ritter, widely known in academic circles as “Mr. IPO,” says the SpaceX listing gives him serious pause. His central worry is the company’s staggering price-to-sales multiple. Ritter noted that companies going public with inflation-adjusted revenues above $100 million and a price-to-sales ratio exceeding 40 have historically underperformed the broader market by a substantial margin over the following three years. SpaceX fits that profile comfortably at its proposed valuation.

Ritter told Business Insider he would be willing to short SpaceX shares once they begin trading. He drew a direct parallel to his existing short position in Palantir Technologies, a bet he entered on valuation grounds alone.

Background: Starlink at the Heart of the Bull Case

Much of the optimism surrounding the SpaceX IPO centers on its Starlink satellite internet business. Growth projections for the unit have long assumed that launch costs would fall sharply over time, expanding margins even as subscription prices declined. Ritter is unconvinced those assumptions will hold, saying he would wager against that outcome. His skepticism is purely valuation-based. He was careful to separate the company’s operational quality from its investment merit, describing SpaceX as a genuinely impressive business while questioning whether it can grow into such a lofty price.

Also Read: Palantir Stock Faces Fresh Scrutiny as Valuation Debate Intensifies

Even Great Companies Can Be Bad Investments

Ritter’s argument echoes a well-worn but frequently ignored principle in public markets. A business can be exceptional on every operational measure and still disappoint investors if the entry price demands perfection. He noted that an enormous number of things would have to go right for SpaceX to grow its operations and profits into a $1.5 to $2 trillion valuation over any reasonable horizon.

Also Read: How Price-to-Sales Ratios Can Signal Overvaluation in High-Growth Stocks

Short-seller Andrew Left of Citron Research has made a similar argument against Palantir, calling that company’s valuation “absurd.” As SpaceX prepares its roadshow, investors will face the same fundamental question: how much future perfection is already priced in?

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