Author: Zhou Hang
SpaceX's valuation before and after its IPO may have been inflated by $1.25 trillion.
This is not denying the greatness of SpaceX. On the contrary, anyone seriously discussing SpaceX must first acknowledge that it may be one of the greatest industrial companies of the past 50 years.
But a company's greatness and whether a stock is worth buying at any price are two entirely different things.
SpaceX can simultaneously be “the greatest industrial achievement of the 21st century” and “a severely overvalued investment.” These two things are not mutually exclusive.
■ First, acknowledge that it is indeed great
Any honest discussion about SpaceX’s valuation must begin with this one sentence: It is the most successful industrial company of the past 25 years, without exception—even more successful than Tesla. This is not hyperbole; it is a fact of engineering economics.
Tesla disrupted a 150-year-old mature industry—automobiles. Its competitors are Mercedes, Ford, and Toyota. These rivals are certainly no weaklings, but they are commercial companies without the backing of national interests or political barriers; the essence of competition lies in products, brands, and supply chains.
SpaceX disrupted a 60-year state-monopolized industry—spaceflight. Its competitors were NASA, Roscosmos, ESA, and CNSA. This isa completely different order of magnitude: higher engineering barriers, greater capital intensity, more complex regulation, and deeper entanglement with national interests. When Musk founded SpaceX in 2002, the entire space industry was essentially an extension of state missions; commercial companies were not considered capable of building rockets, let alone building ones cheaper than those developed by nations.
More than 20 years later, SpaceX reduced launch costs from $54,500/kg during the Space Shuttle era to $1,500/kg—a 36-fold decrease. It now launches 165 times per year, surpassing the combined total of all other countries and commercial players. It built humanity’s first truly reusable rocket, with a single Falcon 9 first stage flying 32 times and achieving a success rate over 99%. It created the world’s first global satellite internet—with coverage for over a billion users—and became a decisive strategic asset on the very first day of the Ukraine war.
Tesla will still face fierce competition from Chinese electric vehicles in 2025; SpaceX's share of the global commercial launch market,has approached monopoly.
SpaceX is a great company, perhaps the greatest industrial company on Earth over the past 50 years. Any criticism regarding its valuation must first acknowledge this fact.
■ What does $1.75 trillion mean?
We can see this through a set of comparisons:
The combined market capitalization of Boeing, Lockheed, Northrop, RTX, and GD. SpaceX’s valuation is 2.5 times the total of these five companies.
In other words, SpaceX's valuation would exceed Mexico's entire annual GDP, surpass the market capitalization of either Tesla or Berkshire Hathaway, and be 2.5 times the combined market value of all traditional aerospace competitors.
This in itself is not an issue—great companies deserve great valuations. But a 2.5x multiple means the market isn’t pricing it as a "space company" or even as an "industrial company." Instead, the market is pricing it as a hybrid paradigm ofsomething closer to "sovereign asset + AI-era infrastructure + narrative premium".
Is this valuation reasonable?
List all of SpaceX's current business lines and carefully calculate how much revenue it could generate by 2030, assuming a reasonable optimistic scenario for each line:
If SpaceX achieves revenue of $50-80B by 2030,its corresponding EBITDA(earnings before interest, taxes, depreciation, and amortization, which can be roughly understood as the cash-generating ability of the company’s core operations)would be approximately $20-35B (at a 40% margin, which is already a very optimistic assumption).
Using a SaaS-style EV/EBITDA multiple of 25–35x—which already represents top-tier valuations for tech companies—SpaceX’s “fair valuation” range in 2030 is $500B to $1.2T.
The conservative anchor point for this range is $500B (estimating all 2030 business lines using reasonable, not speculative, assumptions), while the market is priced at $1.75T.
Gap:$1.25T.
This discrepancy cannot be explained by any standard financial model. It is not the result of DCF (Discounted Cash Flow), nor derived from a P/S ratio, nor determined by comparable company analysis—all of these methods fail to produce a $1.75T valuation.
This discrepancy did not appear out of nowhere. It has three real sources:
Primary source: Long-term vision premium. If Starship operates stably between 2027 and 2030, launch costs could drop to $200/kg or lower, unlocking 30x more capacity—enough to enable new businesses (in-orbit data centers, lunar commerce, deep-space robotics). Anthropic has publicly expressed willingness to pay for gigawatt-scale computing power in space. If this narrative materializes, SpaceX’s total market including new ventures could reach $200–500B/year by 2040. This upper bound is indeed massive—so granting a "vision premium" is entirely reasonable.
Second source: Sovereign assets + strategic positioning premium. SpaceX is no longer just a commercial company—it is a U.S. national strategic asset. $22B in government contracts, HLS lunar landers, NRO classified reconnaissance constellations, Golden Dome missile tracking—these have integrated SpaceX into the U.S. national security framework. In today’s accelerating fragmentation of the global communications order (China sphere / U.S. sphere / third parties), Starlink automatically gains “soft sovereignty” in every market it serves. The full monetization of this status may take over a decade to fully materialize, but the premium is real.
Third source: Retail investors' longing for heroic narratives + Musk worship. This is the hardest to quantify, but anyone familiar with capital markets knows its power. Musk has 200 million followers on X, and he himself is a market capitalization variable. The story of SpaceX—a private company sending humans to Mars, building a global internet, and making humanity a multiplanetary species—is the most heroic business narrative of the past 50 years.
Retail investors aren't buying EBITDA—they're buying a ticket to participate in history.
The first two premiums are "real but slow"; the third premium is "big but fragile." The current $1.75T valuation assumes all three are true and none fail. This is a difficult combination to sustain.
What happens after the IPO?
If SpaceX completes its IPO in the second half of 2026, the next 3-5 years will likely look like this:
Scenario A: Valuation Realization (Probability ~25%). Starship V3 successfully makes its maiden flight in 2027 and enters stable operations in 2028, with the first GW-scale contract for space-based computing secured in 2028. Lunar commercialization progresses according to NASA’s timeline. Although Starlink growth slows, the aviation, maritime, and D2C segments offset the decline in the residential market. In this scenario, $1.75T begins to look undervalued—market valuation is re-rated to $2-3T.
Scenario B: Valuation remains flat and range-bound (probability ~50%). Starship’s delivery pace is slower than expected—only 5/25 = 20% flight tests achieved by 2025; if this pace continues through 2026–2027, V3 may not reach true maturity until 2029–2030. Starlink growth slows to +20%/year. xAI-Anthropic protocol generates real cash flow but lacks a second major contract. The market will realize that "narrative is outpacing reality," causing valuation to oscillate between $1.2T and $1.8T for 3–5 years. This is the most probable scenario.
Scenario C: Valuation Re-discovery (probability ~25%). Continued delays with Starship, xAI clearly falling behind in the AI competition, and personal risk events involving Musk (health, reputation, political) trigger a rapid contraction of the sentiment premium. The market re-prices using fundamental financial models—valuation drops back to the $800B–$1.2T range, equivalent to a "reasonable valuation for a high-quality industrial company." While this scenario is actually beneficial for long-term holders, it represents a 30–50% paper loss for retail investors who bought after the IPO.
Probability-weighted = 0.25 × Upside + 0.50 × Sideways + 0.25 × Downside ≈ Expected value of $1.3-1.5T, below the IPO filing price of $1.75T.
The weighted average of the three probabilities suggests an expected valuation center of SpaceX over the next 3-5 years of approximately $1.3-1.5T—below the current IPO filing price.
On IPO day, buying at $1.75T means your expected return over five years is negative. This is an inevitable result of weighting three scenarios by their probabilities: in the most likely scenario, you get no return; in the worst case, you lose 30–50%; and you only have a 1-in-4 chance of making money.
In Charlie Munger’s words: These are not odds worth betting on.
■ For those planning to buy on the day of the IPO
SpaceX is a great company, but a great company doesn't mean its stock is worth buying at any price. These two things should not be confused.
Tesla was once considered "buy at any price" by many at the end of 2021—when its market cap was $1.2T. Then, over the next two years, Tesla dropped 70%, falling from $1.2T to $400B. This wasn’t because Tesla became a bad company—it’s still an excellent electric vehicle company. It was becausethe price had run far ahead of the fundamentals.
SpaceX's current situation is highly similar to Tesla's at the end of 2021—possibly even more dangerous, as SpaceX's "vision premium" constitutes a larger portion, the narrative is grander, and retail participation may be deeper.
If you truly believe in SpaceX’s long-term vision and are willing to hold for over 10 years, buying at the IPO price may be fine—10 years from now, the company is likely worth significantly more. But if you’re expecting to double your investment within 1 to 3 years, the odds are not in your favor.
A more rational strategy is:
- Don't chase the price on IPO day.
On the first day of any super IPO, the premium is typically the highest. - At least one of the three events occurs
Starship V3 operating stably, first GW-level space computing contract, or stock price returning below $1T - If you must buy now, limit your position.
Don't treat it as a "sure bet"—it isn't. It's a "meaningful long-term uncertainty of +/- 30%".
■ It's a great company, but it can also be an expensive stock
The greatness of a company isfact; whether a stock price is fair ismath. Facts don’t change; math changes every day. In SpaceX’s current valuation structure, the financial model can only explain half—the other half is market sentiment + sovereign status + personal崇拜—this part is not nonexistent, butit is fragile.
After the IPO, something happens: retail investors begin to measure the company by its quarterly earnings. First quarterly report, second, third—each one forces the market to reconcile the "story" with the "reality." This reconciliation process is typically unfavorable to short-term valuations.
If you're buying a company—a great industrial entity, the human infrastructure after Starship, a sovereign asset—then the IPO price is just one point in a 20-year journey; there's no need to dwell on it.
If you're buying into the story—participating in history, following heroes, striving toward our eventual destiny as a multiplanetary species—then acknowledge that this is consumption, not investment.Consumption can be expensive, but you must understand what you're doing.
A company can be the world’s largest, and its stock can simultaneously be overvalued by $1.25 trillion. Both are true, but they must be viewed separately,know whether you’re buying the company or the story.