Based on several reports, the largest initial public offering (IPO) in stock market history, SpaceX, is less than three weeks from becoming a reality.
Elon Musk’s space and artificial intelligence (AI) conglomerate is seeking to raise approximately $75 billion and earn a $1.75 trillion valuation ahead of its expected June 12 debut
And thanks to recent rule changes by the Nasdaq exchange, SpaceX can be fast-tracked into the Nasdaq-100 after just 15 trading days. Combining two of the hottest addressable markets on Wall Street — the space economy and AI — with Musk’s track record of outsize returns (shares of Tesla have soared over 26,000% since their June 2010 IPO) clearly has investors excited. But one dive into SpaceX’s prospectus (i.e., S-1 registration statement) should take the wind right out of its sails.
Admittedly, I wasn’t a fan of the offering prior to its S-1 being made public. But the SpaceX prospectus is far worse than I could have imagined. SpaceX’s valuation is historically unjustifiable For starters, history shows that every company at the forefront of a game-changing technology over the last three decades has topped out at a price-to-sales (P/S) ratio between 30 and 45 (with a little wiggle room at both ends).