Key Points
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SpaceX is targeting a $2 trillion IPO this summer, aiming to raise $75 billion, nearly triple Saudi Aramco’s record.
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A $5,000 IPO investment could grow to $10,400 in the bull case or shrink to $2,050 in the bear case.
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With a potential price-to-sales ratio of more than 100, SpaceX stock would be priced with no room for error.
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Elon Musk’s SpaceX is preparing for what would be the largest initial public offering (IPO) ever this summer, with a target valuation of $2 trillion. The $75 billion it plans to raise in the process would be nearly triple that of the previous record holder, Saudi Aramco.
Retail investors are lining up for the mega-IPO, hoping to get a piece of Starlink, Starship, and xAI all wrapped into one ticker. Despite plans to allocate well above the usual portion of shares to retail investors, it is still expected to be oversubscribed.
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So let’s say you manage to secure $5,000 worth on day one. By June 2030, what could that initial investment look like?
The bull case
In the bull case, Starlink keeps doing what it’s been doing — adding subscribers at the pace that took it past 10 million users earlier this year, continuing to increase revenue rapidly along with the subscriber count, and maintaining its margins, even as competition heats up.
The launch business turns from break-even to genuinely profitable while it continues to dominate space launch, and the economics of xAI start to turn around, with cash burn seriously slowing and revenue expanding considerably.
And critically, the stock’s multiple doesn’t compress too much.
In that world, your $5,000 might turn into roughly $10,400.
The base case
In the base case, Starlink continues to grow, just at a slower rate. Gross margin narrows somewhat.
Image source: Getty Images.
SpaceX still dominates launch and revenue continues to grow, but the unit continues to operate at breakeven, struggling to prove it can consistently turn a profit.
And xAI makes real headway in reversing its current economics, but not nearly as much as in the bull scenario.
Here, $5,000 becomes about $6,550 by 2030.
The bear case
In the bear case, Starlink hits a subscriber ceiling much earlier than bulls expect — growth continues, but at a more pedestrian rate. The competition has forced SpaceX to compete on price, narrowing margins.
The launch division is still the top dog, but it is competing in a more crowded field. And xAI has failed to change its financial picture, still burning much more cash than it produces.
Some of the more far-flung ideas, like orbital data centers, are still far-flung ideas. And, critically, the stock’s multiple compresses.
In this scenario, your $5,000 turns into about $2,050 — close to a 60% decline over four years. That seems extreme — and it would be if you’re a shareholder — but it doesn’t require a doomsday scenario. That’s the issue with a stock that is priced for perfection, and with a potential price-to-sales (P/S) ratio of more than 100, SpaceX stock would absolutely be priced for perfection.
Three scenarios at a glance
| Scenario | Annualized Return | $5,000 After 4 Years | Implied 2030 Valuation |
|---|---|---|---|
| Bull case | 20% | $10,400 | $3.5 trillion |
| Base case | 7% | $6,550 | $2.5 trillion |
| Bear case | (20%) | $2,050 | $1.0 trillion |
Source: Author’s calculations
Is SpaceX stock worth buying at IPO?
The thing about IPOs at this kind of valuation, at this scale, and with multiple businesses whose profitability is unproven, is that the range of outcomes is genuinely huge. A 7% annualized return and a negative 20% annualized return don’t sound all that far apart in the abstract, but compounded over four years, there is a world of difference.
My honest read leans toward the bear end of the spectrum. But plenty of smart people see the bull case as the base case, and they might be right.
And honestly, as we’ve seen with Tesla (NASDAQ: TSLA) stock, sometimes investors are willing to keep paying fabulous multiples for a vision, regardless of the short-term realities of the business.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
