Key Points
Tesla CEO Elon Musk already has one highly valuable company worth $1.6 trillion in his electric vehicle business, and if all goes well for SpaceX when it goes public later this month, he could have another with a comparable market cap. There’s an outside chance that the aerospace company might even hit a valuation of $2 trillion or more.
Interest in SpaceX is high, and there’s sure to be plenty of activity around the stock when it begins trading. Investors could buy it as early as June 12. And while there are many reasons to be excited about the company, there are also important risks to consider with SpaceX’s upcoming IPO. Here are three of the most important risks that could derail the stock when it goes public.
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Its high valuation
Even if SpaceX stock doesn’t fetch a valuation of $2 trillion, it seems highly probable that, at the very least, its market cap will be around $1.5 trillion or more. That’s a hefty value for a business that generated just under $19 billion in revenue last year and which also incurred a loss of $4.9 billion.
When you think of the stocks that are in the trillion-dollar club today, they are highly successful and profitable companies with strong financials. While Tesla may be one of the most overvalued stocks to be part of that club, it generates nearly $100 billion in revenue, and its earnings last year totaled $3.8 billion.
SpaceX, with a high valuation out of the gate, doesn’t have nearly as strong numbers as other stocks with valuations in excess of $1 trillion, and that could weigh on the stock early on, as investors may balk at paying such a high premium for an unprofitable company.
SpaceX has an extremely high rate of cash burn
Not only is SpaceX unprofitable, but it’s also burning through a significant amount of cash. That’s a problem because, with it operating in capital-intensive industries, that means the risk for dilution is high. As it invests in artificial intelligence, data centers, and rockets, demand for cash will be high, and stock offerings could be a big problem for investors.
While it is generating positive cash flow from its day-to-day operating activities, it simply isn’t anywhere near enough to fund its capital purchases. Last year, it generated $6.8 billion in cash from its operating activities but spent around $20 billion on investing activities. In 2025 and 2024, it raised a combined $31.9 billion through the issue of capital stock, and that’s a trend that could continue once it goes public.
The company is also carrying a lot of debt
In addition to raising cash via stock offerings, SpaceX has also taken on debt in order to help finance its operations. As of March 31, the company’s debt and finance leases totaled $30.3 billion. This includes a $20 billion bridge loan that matures in September 2027.
The gravity of the debt is evident in just how high its interest expense has become. Last year, it totaled $1.9 billion, which was an increase of 23% from the previous year. That also accounted for nearly half of its pre-tax loss of $4.2 billion. The higher and more burdensome the interest costs, the more sizable SpaceX’s losses may be.
Should you buy SpaceX stock when it goes public?
It’s tempting to buy the SpaceX IPO given all the excitement, but the risks listed above should at least give you reason to think twice about doing so. Its growth story may seem enticing, but the stock itself comes with significant risks, and they could all drag it down in its early days.
I’d hold off on buying SpaceX. After all, this is a business that’s pursuing some lofty and long-term growth objectives, and it could take a long time for it to realize them; there’s no rush to buy the aerospace stock right away. Taking a wait-and-see approach could reduce your risk and potentially enable you to buy it at a lower price later on.
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David Jagielski, CPA 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.
