Space X IPO: No, Thank You
The SpaceX IPO has been one of the most anticipated public offerings in recent memory, and it may finally be approaching. Recent announcements suggest the IPO for Space X could happen as early as June 2026.
While delays are possible, and to some degree even expected, it is reasonable to assume that sometime in the summer of 2026 investors may have their first chance to buy into one of the largest still-private companies in the world. A
dditionally, the Space X IPO is expected to draw significant attention from the investment community.
That begs the question: should investors consider buying into the Space X IPO or pass?
Our answer, at least, is that investors should pass. Here’s why.
The SpaceX IPO Is Also an xAI IPO and That’s a Problem
This merger is not just an IPO for SpaceX; it involves both Space X and xAI, and these two companies have very little overlap. Notably, many are concerned that the Space X IPO will be affected by the merger with xAI.
SpaceX was founded in 2002 and has over 20 years of operating history. xAI, by contrast, was founded as recently as 2023 and has a far shorter track record. The merger of the two companies ahead of the IPO for Space X makes limited economic sense in our view.
In fact, it appears driven at least partly by marketing and positioning considerations. Both businesses are sufficiently large to pursue a public listing independently.
The Expected Public Float Is Modest
At current valuations, the expected raise of roughly $75 billion would represent only around 5% of total equity. This is modest compared to what some analysts had hoped for from the Space X IPO.
This is not unusually small by historical standards — Google’s IPO was of similar relative size — but it falls well below the approximately 15% sold by Meta at IPO. In general, the larger the percentage of float sold, the greater the likelihood of valuation discipline. In the case of the SpaceX IPO, valuation appears to be the priority over capital raised. At a minimum, investors should not expect a discount based on deal size.
The xAI Merger May Prove Temporary
Over the long run, the combination of Space X and xAI may prove economically difficult to justify. It would not be surprising if the two businesses eventually separate after the IPO is done.
Tesla previously acquired SolarCity, demonstrating a willingness to house unrelated businesses under one umbrella. However, SolarCity was a far smaller business, and that transaction was broadly tolerated by investors rather than welcomed.
There is also a talent retention dimension worth noting. Attracting and incentivizing employees with stock-based compensation becomes considerably more difficult when that compensation is tied to the performance of a holding company rather than the specific business they actually work for. As the merger plays out, this issue could affect the Space X IPO’s long-term trajectory.
xAI Introduces Significant Valuation Opacity
We have not seen the financials of xAI, but based on the known economics of peers such as OpenAI, investors buying at current levels appear to have little, if any, margin of safety with the combined entity post-Space X IPO.
The internal logic behind the implied 4:1 valuation ratio — approximately $1 trillion for SpaceX versus $250 billion for xAI — has not been disclosed. What can be inferred is that the combined entity’s valuation is not trivially affected by how xAI is priced. Moreover, this uncertainty extends to the Space X IPO valuation.
The SpaceX IPO Valuation Looks Stretched Even Before Considering xAI
Let’s examine SpaceX’s standalone valuation before the merger. Importantly, discussions about the Space X IPO often reference the company’s growth and its revenue projections.
As recently as early 2025, SpaceX was valued at approximately $250 billion. In roughly one year, that figure has reportedly climbed to $1 trillion. Furthermore, implied IPO pricing suggests a valuation of $1.2–1.3 trillion for the original SpaceX business, excluding xAI.
That is a significant appreciation for a company with approximately $16 billion in revenue in 2025 and over 20 years of operating history. This level of valuation is a focus of conversation around the Space X IPO.
Revenues are expected to grow to $20–25 billion in 2026. However, even if those estimates prove correct, SpaceX — excluding xAI — would still trade at roughly 50x Price/Sales.
As for xAI, analyst estimates for 2026 revenues generally range from $2–3 billion, with some optimistic projections reaching $4 billion. Even using the most optimistic assumptions, the implied IPO valuation suggests xAI would trade at approximately 70–80x Price/Sales.
With OpenAI expected to pursue its own public listing later in 2026, likely at similar or lower valuation levels, we see little reason to prefer xAI at current pricing, especially given the uncertainties related to the Space X IPO.
Unlike the original SpaceX business, which is profitable, xAI will likely require additional capital. Future fundraising rounds and shareholder dilution are a reasonable expectation following the Space X IPO.
Our Verdict on the SpaceX IPO
To conclude, we defer to Warren Buffett:
“The secret to investment success lies in buying good companies at fair prices.”
SpaceX is a good company — few would dispute that. However, for the Space X IPO, at roughly 50x Price/Sales, we do not believe the price is fair for most investors approaching this public offering.
We will pass.