“Shocking nobody” I would add… This is an obvious Musk scam and anyone with financial knowledge called it as such ever since it’s been on the table. Why else lobby and change the NASDAQ listing rules for instance?
Yes, it is an obvious scam, but as far as I understood, it was a scam that was guaranteed to succeed: SpaceX is listed on Nasdaq and added to the Nasdaq index after only two weeks thanks to the rules Nasdaq changed at SpaceX's behest, so all funds that track Nasdaq have to buy SpaceX shares, so the prices were going to explode automatically because they made sure there will not be enough shares available. What went wrong? Are SpaceX employees dumping their shares so fast that supply outstrips demand?
This is shaped like more-or-less every IPO I've seen. I think you have to wait for more of a collapse to claim dispositive evidence of a scam (or widen your claim to 'almost all IPOs are scams').
This is something you could empirically study. Looks like this NASDAQ study from a few years back has some numbers. At 3 months, that’s what’s in their chart, it’s still about 50/50. At 3 years it’s 29% with returns greater than 10% and 69% with returns greater than -10%.
SpaceX has a float of 5%. So only 5 of the shares have been released to the public. Slowly, starting in August, employees and investors will be able to sell their shares, about 45% more until December 2026 and another 45% until July 2027.
What do you think will happen to SpaceX share prices when roughly 18x the number of shares at IPO are released?
From a company that only made $18bn in sales last year and lost $5bn. For reference, Aramark, a company basically nobody has heard of made as much money and even turned a $0.5bn profit.
SpaceX shouldn't be worth more than $30 in 1 year's time.
Of course, irrationality can be an extremely strong force, so let's see.
I don’t think scam is the right word. The valuation and bank price targets are absolutely insane. I myself could never invest at those multiples. I think they absolutely have governance problems but at the same time I have to admit he is a great financial engineer.
Investors who do have conviction here most likely see this as the platform vehicle for everything else coming through the pipeline. Again I could not buy into that but I think it’s a far cry from a scam.
They're perfectly consistent. An absured valuation isn't evidence of fraud. Exceptional capital formation isn't fraud either. You're conflating overpriced, good at raising money and scam as if they're synonyms. I am curious how the absurd bank price targets will play out in the long-term and if there will be any repercussions but its hard to immediately jump to scam but I realize this is the favorite fan-fic for folks on both sides.
I'm unclear why you don't think it's a scam, because "he is a great financial engineer" seems awfully close to admitting that and then the "platform vehicle for everything else coming through the pipeline" seems to be the clincher that it is indeed a scam.
For example, he's talking about data centers in space as the "everything else coming through the pipeline" and space data centers are an obvious engineering boondoggle, but sound cool to people that don't know anything about data center design or the challenges of space engineering (ie heat rejection)
> I don’t think scam is the right word. The valuation and bank price targets are absolutely insane.
I was hoping you were headed to "...beyond scam" into serious fraud or something. Regardless how this is categorized, everyone (banks, stock market, the executive branch) is complicit, and I think SpaceX stock should have stayed off the public market.
There's no room in the global economy to justify the kinds of numbers.
Like spacex isn't going to be the world's first 100 trillion dollar company because there isn't that much money. That's nearly as high as the global GDP.
Not a scam IMO, I don’t think musk is that motivated by wealth but im sure plenty of the heavy hitter investors are. I’m sure he didn’t complain about the valuation however. I think SpaceX is a solid well run company (praise be to Gwen Shotwel) but $1T is a bit much. I’ll eventually buy in when things settle down and we have a few quarters of financial data to work with.
What you describe is exactly a scam: he somehow convinced you that he's not motivated by wealth! That alone is clearly a scam, the idea that Musk is not motivated by huge amounts of wealth and high valuations is just implausible considering g his behavior at every single turn.
He's too busy shitposting on twitter to use his wealth in any meaningful way. I just want to know if once he's on his deathbed he thinks to himself "I just wish I could call one more person on twitter retarded, that was a good use of my time on earth"
I think it does have a worthwhile service, but it also was used to hide the x.com losses. I think it is probably still pretty overvalued, but I'll watch to see how it's intrinsic value changes. I certainly don't think it's undervalued, or a deal at the current price.
I’m way out of my depth in suggesting this idea, so forgive me if I’m committing a conceptual “divide by zero” and it’s not even wrong:
It seems like the SpaceX IPO really breaks the traditional notion of market cap.
Market cap has an unstated assumption that most of a company’s stock could, in theory, be traded unencumbered. Thus shares * price gives a very rough view of the value of the company. Everyone understands that this valuation has problems: it attributes the last marginal trade to the entire stock, and doesn’t account for large purchases/sales. But it’s useful nonetheless.
But with SpaxeX, only a tiny fraction of those shares are even theoretically tradeable, so it seems bizarre to calculate valuation using price * shares. I think this is the source of discomfort around the $2T market cap.
It seems like, similar to how there are long and short term liabilities, there should be long and short term market caps.
“Short term market cap” would be price * “number of shares that could theoretically be available for trade within the next year”, from all sources (including vesting employee options, expiring lockups, etc).
“Long term market cap” would be price * total authorized shares.
So SpaceX’s long term market cap would remain at $2T and its short term market cap would be, say, 5% of that (about $100B).
Market cap has been that sort of fiction from the beginning. It's never been a terribly useful number. There's really no fixing it because the only way to "truly" value a company is to sell it, for real, on the open market. Anything else is just a guess. More or less educated, but a guess. SpaceX isn't creating this problem or making it particularly worse.
What you are describing is what's called free float market cap and is generally what market indices use to weigh stocks. That way you're only trying to replicate the market of stocks that are actually available to trade. There's nothing new about SpaceX in that respect, plenty of companies have float much lower than their total.
The IPO was meant for the VCs to cash out as all fundamentals were completely irrational, but seems like no one cares about cash flow and profitability anymore during QE times. Dumb money will keep being dumb I guess
The IPO featured less than 5% of shares as free float. So the investors are still in pretty deep with their hands tied until lock-up restrictions expire. The IPO was more of a quick, public financing round for their AI branch than an exit for SpaceX VCs.
As those lock-ups expire I only see the stock sliding further. Still, the very early investors will probably make bank, with the retail investors holding the bag.
Many of those early investors would have invested in a rocket company, I doubt many of them were overjoyed to be saddled with all the debts from an AI company and Twitter.
No one can care about fundamentals in QE times. If you stay out of the market just because nothing there is valuable, you will lose your money to the hidden inflation and won't be able to buy anything there when you want in.
In normal inflation you can at least buy commodities. But the US economy is organized in a way that will concentrate the money on stocks, not commodities.
You've been through this before and have the scars or have seen them on others. It is hard to explain to those who have not. Though they only need look at a historical chart.
I suggest you take a deeper look at what's happening.
The Fed announced they will transition away from QE yesterday. When they did that 5 years ago, a lot of things happened and they completely gave up on the idea.
> If no one cared about cash flow and profitability wouldn't SpaceX stock go up instead of down?
In addition to looking at the "fundamentals" of a company like cash flow and profitability, there is also a 'meta-game' that traders (as opposed to investors) have to look at:
> A Keynesian beauty contest is a metaphorical beauty contest in which judges are rewarded for selecting the most popular choices among all judges, rather than those they may personally find the most attractive. This idea is often applied in financial markets, whereby investors could profit more by buying whichever stocks they think other investors will buy, rather than the stocks that have fundamentally the best value, because when other people buy a stock, they bid up the price, allowing an earlier investor to cash out with a profit, regardless of whether the price increases are supported by its fundamentals and theoretical arguments.
"whereby investors could profit more by buying whichever stocks they think other investors will buy, rather than the stocks that have fundamentally the best value"
I think one thing to point out is "everyone" in this context is probably the broader market, but the stock holdings aren't distributed uniformly. A few large investors could actually be sophisticated and unload a fortune and the rest of the shareholders could still largely still ignore fundamentals and suffer large losses. The broad market can be ignorant and the stock can (and is) be down, both things can be true.
People cared after the IPO but initially in far less informed circles I constantly heard from lower sophisticated investors bragging about how they'd been allocated X shares like they were Pokemon trading cards they managed to snag. They weren't very sensitive to the price, only to brag to their friends they had snagged them. After the shiny wore off and no one cared about how cool they were, they sold them.
No this was anomalous for an IPO. People were limited to something like 10 shares that they had to pre-order like they were special order trading cards with an order cap as direct recipients of the initial shares.
Usually the public starts buying IPOs in open market operations on the secondary market, which removes some of the shiny and "limited" factor.
IPOs are designed to achieve a 20% pump, generally do achieve it, and did achieve it in the case of SPCX. Buying shares at the base of the pump that you are allowed to sell at +20% is a license to cash in. Why would anyone sell you those shares at that price, then? They are paying you to cultivate the "rare pokemon card" atmosphere that gets the less sophisticated investors excited and willing to buy the top. A dollar spent selling below-market shares to a promoter returns many dollars of exit liquidity. This is how investment banks make their IPO money and it's how social media promoters make their money. The promoters aren't the ones being fleeced. There are people who think they are promoters but are actually suckers -- but that's a separate matter. The price always tells the true story.
> No this was anomalous for an IPO. People were limited to something like 10 shares that they had to pre-order like they were special order trading cards with an order cap as direct recipients of the initial shares.
It all depends on your broker. My Australian broker gave everyone ~40% of their request and refunded the rest (typical Australian practice for IPOs). An American friend put in for >20x as much as I did with his US broker, they gave him nothing and refunded the full amount.
Is it possible that people who don't care about short term profitability but still want a strategic ownership of the company bought at a high price on IPO day and now that the day traders are in, speculation will readjust the price to short term values? The change of price just reflect the different buyer profiles.
SpaceX is a pretty important company not just for "the market" but also for many other things (see Russia/Ukraine war).
But why would you want to buy a company where the valuation reflects an extremely optimistic outcome already? Basically you are assuming obscene growth from SpaceX in AI, datacenters, rocket launches etc just to for the stock to go nowhere. The market cap was over 2T!
When you buy equities, if the company turns out shockingly successful beyond most peoples probable expectations you dont simply want your investment to just stay flat, you want to make multiples of your money. In order to do this, you simply cant start from a 2T marketcap. No company worth 2T can make you 100x your money or even 10x or 5x your money in a reasonable amount of time given the overall size of the economy.
Buying at a high price just gives money to the early investors, the company itself doesn't get richer unless they're doing a raising capital round, but after an IPO you're just giving liquidity (+ profit) to early investors.
If you wait till the price comes down to its natural level, you'll be able to buy more of the company for less money.
As a scientific adventure, SpaceX is a worthy company full of awesome people. But the management and VCs is another story, as usual. To price it at a market cap of $1.8T, somewhere double that of Walmart is insane.
SpaceX, despite its name is an AI company, supposedly. Its S-1 states that the company estimates its total addressable market (TAM) at $28.5 trillion, of which $26.5 trillion, or 92.98%, is expected to come from AI.
SpaceX is an AI company without a frontier model. Until Jan 2026 SpaceX was an aerospace company. Then xAI was merged into SpaceX on January 30, 2026, so SpaceX became an AI company less than 6 months ago.
> SpaceX is an AI company without a frontier model.
Unless they manage to build such a model, then their plan looks like they intend to be an AI _infrastructure_ company. Which is probably viable and healthy business! One with lots of competition and low margins that is completely misaligned with their current valuation.
Mainly it’s a REIT that bought a bunch of hardware which is now depreciating like fresh lettuce. They don’t even have a way to use it productively for AI purposes themselves and are instead renting it to competitors, who are using it to lap them.
My understanding is that an ideally priced IPO should not move much from the opening price in the near term. If it pops it means they left money on the table. If it drops, then I am not sure what the implication is exactly?
Now I think SpaceX is massively overhyped, but is the share price returning to IPO opening not just a sign that the banks accurately estimated something?
Your bank will get a ton of orders from institutional investors of how many shares they want at a given price. You will have a preference as to which investors you want on your cap table. Almost all of those investors value your stock less than the "pop price" (which includes the investors you want on your cap table). So you'll need to target the IPO below the "pop price" so you get them on your cap table.
You're probably picking investors based on how likely they'll let you stay on the board / CEO and if you think they're just going to dump the stock during the IPO (which would be bad for it's price).
So (unlike the SpaceX IPO) you're going to sell relatively little shares to retail who will buy at any price which during the opening days will cause it to spike as the demand (in nominal dollars) per share is beyond the IPO price target.
> but is the share price returning to IPO opening not just a sign that the banks accurately estimated something?
Sure they estimated something. But there's a ton of different things that can be estimated.
What do you mean by this? The person you responded to never used the words "should" or "should not", and then you basically repeated what they said using more neutral words...
What is so controversial about saying that SpaceX seems overpriced?
His point is that sellers can do whatever suits their interests best, they don't have a duty to pick a fair price. And that it's on the buyer to decide whether to accept it or reject the price.
Duh? That point was actually implied by my initial comment.
Nobody said anything about fairness or duty.
My point was that if the seller is trying to maximize its self-interest by maximizing the IPO price, leaving no room for growth after IPO, then buyers probably want to take a pass at that price.
There’s still really nothing keeping it at even these lower levels except pure hype. By the fundamentals typically applied to aggressive growth companies a “sane” price is closer to $40-60 and even that would be very aggressive considering the company’s financials.
If the company doesn’t quickly show a financial picture that matches the sky high pro forms then even anything close to those levels will become extremely hard to justify.
Anyone buying IPO for short term gain would have exited at initial spike, others (like me got in at allocation price) will be holding for a decade or two so this is noise, expected not sure why it posted here, do we post every tech stock intra day price move
And I don't understand why a serious media outlet is covering this at all. The entire article could be irrelevant the next day.
Without any actual, meaningful news coming out of the company (important financial update, new product, bankruptcy etc), stock price moves are only meaningful to day traders, not anyone who is doing serious investing. LA Times is making themselves the same as CNBC or sources you find on Yahoo finance.
I always wonder why not more companies are using more creative approaches like Google's Dutch auction to set their IPO price.
It seems direct listings gained some popularity but overall most companies seem to rely on the traditional underwriter model.
According to [0] -
> 22 companies went public on major exchanges using IPO auctions in the U.S. between 1999-2008, but there have been none since then, as of May 2025. Starting in 2018 when Spotify went public, there have been at least 20 companies that have gone public using a direct listing. With both IPO auctions and direct listings, underwriters do not have discretion to allocate shares to their preferred clients.
The Dutch auction wasn't all that smooth, with Google having to adjust prices at the last minute. Most results show that it didn't really produce all that much of a benefit over a traditional IPO, where (the issuing company) at least gets a guaranteed minimum amount of money to raise. Pretty much the only alternative is a direct listing for companies that want to go public, but don't need to raise money. (Well, there's also SPACs, but that's a different beast).
When banks, pension funds and other institutional investors are fighting to outbid each other to get a slice of your IPO why would you care about finding an accurate value and being "fair"? Whether the price goes up and down post IPO isn't really the company's concern. They already have the cash.
Google's process produced a price of IIRC $85/share and on first-day trading soared to >$100 so there was a lot of discussion at the time about how efficient that process was.
But really that's how all IPOs work, basically. You have one of more investment banks that underwrite the offering. They're basically guaranteeing to sell a certain number of shares to their clients at a given price. Those clients can be institutional investors, pension funds, high net worth individuals and so on. But there's a feedback loop here where clients might push back on a certain price.
IPOs love these sorts of investors because they tend to buy and not sell. If everyone sells the IPO will flop. Retail investors are far less "loyal".
The IPOing company also has levers where they can manipulate the price, most notably on the supply side ie by limiting or expanding the size of the float. SpaceX's float (as a percentage of the company) was actually really small.
What's unique about the SpaceX IPO was that it would immediately become one of the world's most valuable listed companies so there'd be a lot of induced demand from index funds. The underhanded (IMHO) aspect to all this was that the rules were deliberately changed so passive investors would be exposed almost immediately rather than first allowing some form of price discovery by the market. NASDAQ capitualted. S&P did not.
I guess the real manipulation here is the fiction that SpaceX is an AI company, which ultimately goes back to a series of bailouts for terrible decisions going back to the Twitter purchase. SpaceX's AI pitch was orbital data centers, which make no sense, and using their ill-gotten NVidia chip allocations to rent them to Google.
Because he's a psychopath who is actively making the world worse. Anyone who stands on stage with a chain saw and cuts US AID with a smile on his face is a truly horrible person. Anyone who hoards a trillion dollars while others starve is a truly horrible person. Did you root for the Empire in Star Wars? I hope nothing but the worst for him so maybe someone with a conscious and a soul replaces him.
IPOs are generally not a good investment, at least not relative to average market return:
> However, a year later, we see that the majority of companies are either outperforming or underperforming the market by more than 10%. We also see that more companies are underperforming than beating the index (the red bars stretch below the 50% line).
> That seems to indicate that for some companies, the initial IPO enthusiasm wanes or expected earnings are not met, and investors reprice the IPO to reflect the actual, slower growth of the company.
> Three years after their IPO, we calculate that almost two-thirds of IPOs are underperforming the market, with most (64%) more than 10% behind the market’s returns.
> 56% of IPOs bought at the offer price lost money after 3 years. That number rises to 57% after five years. The numbers are higher when bought at the first day closing price: 60% lost money after 3 and 5 years. Worse than a coin flip.
> Only 19% of IPOs doubled or more after three years and 22% after 5 years when bought at the offering price. The numbers were worse when bought at the closing price.
> Of course, the lottery-like returns were possible, but it amounted to about 0.4% of all IPOs after 3 years and 1% after five years.
Interview with a researcher that has looked at IPOs over the last few decades:
> We’ve previously compared IPOs to lotteries that are prone to inflated valuations and low returns. Today we welcome “Mr. IPO,” Professor Jay Ritter onto the show for a deeper dive into IPO performance, for his insights into SPACs, and to hear his research into why economic growth doesn’t correlate with stock returns. Early in the episode, Jay unpacks how long-term IPO returns perform against first-day trading. While exploring the role that venture capital plays in tech IPOs, Jay talks about why negative earnings don’t affect tech IPOs in the short-term before sharing how skewness factors tend to impact young companies. Reflecting on how IPOs are usually underpriced, Jay discusses how the interests of companies are not aligned with the interests of IPO underwriters. After looking into IPO allocation, Jay compares the 2020 ‘hot IPO market’ with the internet bubble of the late 90s. Later, we ask Jay about what special-purpose acquisition companies (SPACs) are and why they’ve exploded in recent years. His answers highlight their investing benefits, risks, and why SPACs might be a better option for companies than IPOs. We examine how SPACs have historically performed and then jump into our next topic; why economic growth isn’t a good indicator that a country is worth investing in. He touches on why returns don’t correlate with economic growth, the place of capital gains and dividend yields when investing abroad, and how innovations in an industry can lead to higher stock returns. We wrap up our conversation by asking Jay for his take on whether the stock market is efficient before hearing how he defines success in his life. Tune in to hear our incredible and informative talk with Jay Ritter.
Many IPO's have the same trajectory that SpaceX did - first going up steeply and then dropping steeply. So there's certainly money to be made if you get the timing right but that is always the challenge.
If the IPO can't find institutional buyers at the price and has to resort transferring the initial shares directly to the public, safe to assume they've hyped the public into being the bag holder. What SpaceX did is rare for a reason.
Maybe this has to do with the technical unfeasibility of sending human to Mars and back to earth while keeping them alive ? Throwing billions at it won't make it happen magically.
Typical IPO pattern. Hyped IPOs shoot up and then correct, some correct more than others. Traders take their profits. Nothing new here, just bigger headlines because it's a big name. The bigger the name, the bigger the hype.
ffs, wake me up when it's at least 10% below what it IPO'd for. The idiotic tulip mania that followed in the few days after it floated was noise, but as of today, it seems the IPO price was pretty much right. However, endless headlines about the price crashing etc.
From a fundamentals perspective, it's an insane price, obviously. But the narrative that it's all coming crashing down is obviously not correct (today).
Do yourself a favor and DCA in from here. SpaceX was "only" valued at 210 Billion back in June 2024, around 11% of its current valuation. A return to that valuation would take it down to ~$16/share!
SpaceX is a phenomenal company. I've wanted to buy in since 2009. But the stock is the exact inverse of my ideal single-stock investment thesis--huge downside with severely limited short-to-mid-term upside, given the huge premium already being paid.
Me too, and not for any rational reason or because I value my money or my investing strategies, but simply because I have a high risk tolerance, and it seems like these days that’s all you need to make money.
No real skill, no real research. Just ride the hype train, shrug if you lose, and never gloat when you win. Simply take the profit, stfu, and buy a Porsche or some RAM.
“Shocking nobody” I would add… This is an obvious Musk scam and anyone with financial knowledge called it as such ever since it’s been on the table. Why else lobby and change the NASDAQ listing rules for instance?
Yes, it is an obvious scam, but as far as I understood, it was a scam that was guaranteed to succeed: SpaceX is listed on Nasdaq and added to the Nasdaq index after only two weeks thanks to the rules Nasdaq changed at SpaceX's behest, so all funds that track Nasdaq have to buy SpaceX shares, so the prices were going to explode automatically because they made sure there will not be enough shares available. What went wrong? Are SpaceX employees dumping their shares so fast that supply outstrips demand?
This is shaped like more-or-less every IPO I've seen. I think you have to wait for more of a collapse to claim dispositive evidence of a scam (or widen your claim to 'almost all IPOs are scams').
This is something you could empirically study. Looks like this NASDAQ study from a few years back has some numbers. At 3 months, that’s what’s in their chart, it’s still about 50/50. At 3 years it’s 29% with returns greater than 10% and 69% with returns greater than -10%.
https://www.nasdaq.com/articles/what-happens-to-ipos-over-th...
SpaceX has a float of 5%. So only 5 of the shares have been released to the public. Slowly, starting in August, employees and investors will be able to sell their shares, about 45% more until December 2026 and another 45% until July 2027.
What do you think will happen to SpaceX share prices when roughly 18x the number of shares at IPO are released?
From a company that only made $18bn in sales last year and lost $5bn. For reference, Aramark, a company basically nobody has heard of made as much money and even turned a $0.5bn profit.
SpaceX shouldn't be worth more than $30 in 1 year's time.
Of course, irrationality can be an extremely strong force, so let's see.
It's right at IPO price, which (thus far) means it was more or less priced correctly.
I don’t think scam is the right word. The valuation and bank price targets are absolutely insane. I myself could never invest at those multiples. I think they absolutely have governance problems but at the same time I have to admit he is a great financial engineer.
Investors who do have conviction here most likely see this as the platform vehicle for everything else coming through the pipeline. Again I could not buy into that but I think it’s a far cry from a scam.
Can you spell out a bit more how these three thoughts live together consistently for you:
1) The price is insane
2) The price is a work of great financial engineering
3) The price isn’t a scam
They're perfectly consistent. An absured valuation isn't evidence of fraud. Exceptional capital formation isn't fraud either. You're conflating overpriced, good at raising money and scam as if they're synonyms. I am curious how the absurd bank price targets will play out in the long-term and if there will be any repercussions but its hard to immediately jump to scam but I realize this is the favorite fan-fic for folks on both sides.
I'm unclear why you don't think it's a scam, because "he is a great financial engineer" seems awfully close to admitting that and then the "platform vehicle for everything else coming through the pipeline" seems to be the clincher that it is indeed a scam.
For example, he's talking about data centers in space as the "everything else coming through the pipeline" and space data centers are an obvious engineering boondoggle, but sound cool to people that don't know anything about data center design or the challenges of space engineering (ie heat rejection)
> I don’t think scam is the right word. The valuation and bank price targets are absolutely insane.
I was hoping you were headed to "...beyond scam" into serious fraud or something. Regardless how this is categorized, everyone (banks, stock market, the executive branch) is complicit, and I think SpaceX stock should have stayed off the public market.
There's no room in the global economy to justify the kinds of numbers.
Like spacex isn't going to be the world's first 100 trillion dollar company because there isn't that much money. That's nearly as high as the global GDP.
Crazy growth rates are not possible.
> Like spacex isn't going to be the world's first 100 trillion dollar company because there isn't that much money.
That doesn't really matter. As we saw with crypto valuations, market cap is just number of shares * last price.
If you have 1 trillion shares and one is traded for $100 you have a 100 trillion market cap.
> there isn't that much money
It's almost as if SpaceX would have to use another planet's resources to generate money for that valuation. Oh wait...
I warned people 2 months ago:
https://news.ycombinator.com/item?id=48368668
I was told I was giving poor advice explaining how to avoid exposure to the latest Musk grift. Unfortunate.
https://news.ycombinator.com/item?id=48374430
And it worked. And whatever schemes he has in mind to have Space X merge with Tesla to increase market cap further will work too.
It really showed which financial commentators should be ignored. Hearing some of them speak was just painful.
Not a scam IMO, I don’t think musk is that motivated by wealth but im sure plenty of the heavy hitter investors are. I’m sure he didn’t complain about the valuation however. I think SpaceX is a solid well run company (praise be to Gwen Shotwel) but $1T is a bit much. I’ll eventually buy in when things settle down and we have a few quarters of financial data to work with.
What you describe is exactly a scam: he somehow convinced you that he's not motivated by wealth! That alone is clearly a scam, the idea that Musk is not motivated by huge amounts of wealth and high valuations is just implausible considering g his behavior at every single turn.
What is he doing with all that wealth? Taking lavish vacations? Buying luxurious yacht? Buying islands and making bunkers?
He's too busy shitposting on twitter to use his wealth in any meaningful way. I just want to know if once he's on his deathbed he thinks to himself "I just wish I could call one more person on twitter retarded, that was a good use of my time on earth"
Do you hold spcx?
I think it does have a worthwhile service, but it also was used to hide the x.com losses. I think it is probably still pretty overvalued, but I'll watch to see how it's intrinsic value changes. I certainly don't think it's undervalued, or a deal at the current price.
> "Not a scam IMO"
> "I think SpaceX is a solid well run company"
This should be all the proof you need that it's a scam. Here's why:
The company isn't "SpaceX" it's "SpaceXAI", and nearly all of the valuation comes from the "AI" component, not the "SpaceX" component.
I’m way out of my depth in suggesting this idea, so forgive me if I’m committing a conceptual “divide by zero” and it’s not even wrong:
It seems like the SpaceX IPO really breaks the traditional notion of market cap.
Market cap has an unstated assumption that most of a company’s stock could, in theory, be traded unencumbered. Thus shares * price gives a very rough view of the value of the company. Everyone understands that this valuation has problems: it attributes the last marginal trade to the entire stock, and doesn’t account for large purchases/sales. But it’s useful nonetheless.
But with SpaxeX, only a tiny fraction of those shares are even theoretically tradeable, so it seems bizarre to calculate valuation using price * shares. I think this is the source of discomfort around the $2T market cap.
It seems like, similar to how there are long and short term liabilities, there should be long and short term market caps.
“Short term market cap” would be price * “number of shares that could theoretically be available for trade within the next year”, from all sources (including vesting employee options, expiring lockups, etc).
“Long term market cap” would be price * total authorized shares.
So SpaceX’s long term market cap would remain at $2T and its short term market cap would be, say, 5% of that (about $100B).
Market cap has been that sort of fiction from the beginning. It's never been a terribly useful number. There's really no fixing it because the only way to "truly" value a company is to sell it, for real, on the open market. Anything else is just a guess. More or less educated, but a guess. SpaceX isn't creating this problem or making it particularly worse.
What you are describing is what's called free float market cap and is generally what market indices use to weigh stocks. That way you're only trying to replicate the market of stocks that are actually available to trade. There's nothing new about SpaceX in that respect, plenty of companies have float much lower than their total.
Nah, it's fairly common for only a relatively small part of a company to be tradeable.
No, shares are shares. Public or not.
The IPO was meant for the VCs to cash out as all fundamentals were completely irrational, but seems like no one cares about cash flow and profitability anymore during QE times. Dumb money will keep being dumb I guess
The IPO featured less than 5% of shares as free float. So the investors are still in pretty deep with their hands tied until lock-up restrictions expire. The IPO was more of a quick, public financing round for their AI branch than an exit for SpaceX VCs.
As those lock-ups expire I only see the stock sliding further. Still, the very early investors will probably make bank, with the retail investors holding the bag.
Many of those early investors would have invested in a rocket company, I doubt many of them were overjoyed to be saddled with all the debts from an AI company and Twitter.
Big shift will happen after their Q2, 20% of eligible shares release; directed-share (friends & family) participants may sell for the first time.
Q2 call is expected in a month or so? But they also state Aug 21 is 37% of shares will go public.
https://spcx.capital/spacex-stock-lockup-dates
No one can care about fundamentals in QE times. If you stay out of the market just because nothing there is valuable, you will lose your money to the hidden inflation and won't be able to buy anything there when you want in.
In normal inflation you can at least buy commodities. But the US economy is organized in a way that will concentrate the money on stocks, not commodities.
You've been through this before and have the scars or have seen them on others. It is hard to explain to those who have not. Though they only need look at a historical chart.
The Fed transitioned from QE to tightening almost 5 years ago.
I suggest you take a deeper look at what's happening.
The Fed announced they will transition away from QE yesterday. When they did that 5 years ago, a lot of things happened and they completely gave up on the idea.
If no one cared about cash flow and profitability wouldn't SpaceX stock go up instead of down?
> If no one cared about cash flow and profitability wouldn't SpaceX stock go up instead of down?
In addition to looking at the "fundamentals" of a company like cash flow and profitability, there is also a 'meta-game' that traders (as opposed to investors) have to look at:
> A Keynesian beauty contest is a metaphorical beauty contest in which judges are rewarded for selecting the most popular choices among all judges, rather than those they may personally find the most attractive. This idea is often applied in financial markets, whereby investors could profit more by buying whichever stocks they think other investors will buy, rather than the stocks that have fundamentally the best value, because when other people buy a stock, they bid up the price, allowing an earlier investor to cash out with a profit, regardless of whether the price increases are supported by its fundamentals and theoretical arguments.
* https://en.wikipedia.org/wiki/Keynesian_beauty_contest
"whereby investors could profit more by buying whichever stocks they think other investors will buy, rather than the stocks that have fundamentally the best value"
I think one thing to point out is "everyone" in this context is probably the broader market, but the stock holdings aren't distributed uniformly. A few large investors could actually be sophisticated and unload a fortune and the rest of the shareholders could still largely still ignore fundamentals and suffer large losses. The broad market can be ignorant and the stock can (and is) be down, both things can be true.
The company is still overvalued by a pretty massive multiplier
People cared after the IPO but initially in far less informed circles I constantly heard from lower sophisticated investors bragging about how they'd been allocated X shares like they were Pokemon trading cards they managed to snag. They weren't very sensitive to the price, only to brag to their friends they had snagged them. After the shiny wore off and no one cared about how cool they were, they sold them.
That is to be expected with any high profile IPO.
No this was anomalous for an IPO. People were limited to something like 10 shares that they had to pre-order like they were special order trading cards with an order cap as direct recipients of the initial shares.
Usually the public starts buying IPOs in open market operations on the secondary market, which removes some of the shiny and "limited" factor.
IPOs are designed to achieve a 20% pump, generally do achieve it, and did achieve it in the case of SPCX. Buying shares at the base of the pump that you are allowed to sell at +20% is a license to cash in. Why would anyone sell you those shares at that price, then? They are paying you to cultivate the "rare pokemon card" atmosphere that gets the less sophisticated investors excited and willing to buy the top. A dollar spent selling below-market shares to a promoter returns many dollars of exit liquidity. This is how investment banks make their IPO money and it's how social media promoters make their money. The promoters aren't the ones being fleeced. There are people who think they are promoters but are actually suckers -- but that's a separate matter. The price always tells the true story.
> No this was anomalous for an IPO. People were limited to something like 10 shares that they had to pre-order like they were special order trading cards with an order cap as direct recipients of the initial shares.
It all depends on your broker. My Australian broker gave everyone ~40% of their request and refunded the rest (typical Australian practice for IPOs). An American friend put in for >20x as much as I did with his US broker, they gave him nothing and refunded the full amount.
Is it possible that people who don't care about short term profitability but still want a strategic ownership of the company bought at a high price on IPO day and now that the day traders are in, speculation will readjust the price to short term values? The change of price just reflect the different buyer profiles.
SpaceX is a pretty important company not just for "the market" but also for many other things (see Russia/Ukraine war).
Fair warning: I know nothing about all this.
But why would you want to buy a company where the valuation reflects an extremely optimistic outcome already? Basically you are assuming obscene growth from SpaceX in AI, datacenters, rocket launches etc just to for the stock to go nowhere. The market cap was over 2T!
When you buy equities, if the company turns out shockingly successful beyond most peoples probable expectations you dont simply want your investment to just stay flat, you want to make multiples of your money. In order to do this, you simply cant start from a 2T marketcap. No company worth 2T can make you 100x your money or even 10x or 5x your money in a reasonable amount of time given the overall size of the economy.
>But why would you want to buy a company where the valuation reflects an extremely optimistic outcome already?
To hedge against the stock going up and making your buy in even more expensive.
It's all a bit of a mess with the consolidation of multiple businesses.
> SpaceX is a pretty important company not just for "the market" but also for many other things (see Russia/Ukraine war)
Starlink, which was rolled in to SpaceX, is/was profitable and it is a factor in Ukraine.
The rocket division is not profitable, but I sense that there might be a path to a profitably operating business.
As for the X/xAI piece, who knows? Long-term it seems like a moon-shot. I appreciate the irony that it's in the wrong division.
Buying at a high price just gives money to the early investors, the company itself doesn't get richer unless they're doing a raising capital round, but after an IPO you're just giving liquidity (+ profit) to early investors.
If you wait till the price comes down to its natural level, you'll be able to buy more of the company for less money.
What is your idea of strategic ownership? Musk has voting control, everyone else is along for the ride.
There are no "pretty important" companies with the relatively meager revenues SpaceX has got.
> SpaceX is a pretty important company not just for "the market" but also for many other things (see Russia/Ukraine war).
True, if Twitter and xAI stopped existing, there would be an uproar from all the suddenly unemployed disinformation botters.
SpaceX / Musk is the company which will build the Dyson Swarm. This is an opportunity to get in at the ground level.
As a scientific adventure, SpaceX is a worthy company full of awesome people. But the management and VCs is another story, as usual. To price it at a market cap of $1.8T, somewhere double that of Walmart is insane.
SpaceX, despite its name is an AI company, supposedly. Its S-1 states that the company estimates its total addressable market (TAM) at $28.5 trillion, of which $26.5 trillion, or 92.98%, is expected to come from AI.
SpaceX is an AI company without a frontier model. Until Jan 2026 SpaceX was an aerospace company. Then xAI was merged into SpaceX on January 30, 2026, so SpaceX became an AI company less than 6 months ago.
> SpaceX is an AI company without a frontier model.
Unless they manage to build such a model, then their plan looks like they intend to be an AI _infrastructure_ company. Which is probably viable and healthy business! One with lots of competition and low margins that is completely misaligned with their current valuation.
It might be a viable business model, but does not warrant anywhere near these valuations.
> AI company, supposedly
Mainly it’s a REIT that bought a bunch of hardware which is now depreciating like fresh lettuce. They don’t even have a way to use it productively for AI purposes themselves and are instead renting it to competitors, who are using it to lap them.
My understanding is that an ideally priced IPO should not move much from the opening price in the near term. If it pops it means they left money on the table. If it drops, then I am not sure what the implication is exactly?
Now I think SpaceX is massively overhyped, but is the share price returning to IPO opening not just a sign that the banks accurately estimated something?
In general terms you want the stock to pop.
Your bank will get a ton of orders from institutional investors of how many shares they want at a given price. You will have a preference as to which investors you want on your cap table. Almost all of those investors value your stock less than the "pop price" (which includes the investors you want on your cap table). So you'll need to target the IPO below the "pop price" so you get them on your cap table.
You're probably picking investors based on how likely they'll let you stay on the board / CEO and if you think they're just going to dump the stock during the IPO (which would be bad for it's price).
So (unlike the SpaceX IPO) you're going to sell relatively little shares to retail who will buy at any price which during the opening days will cause it to spike as the demand (in nominal dollars) per share is beyond the IPO price target.
> but is the share price returning to IPO opening not just a sign that the banks accurately estimated something?
Sure they estimated something. But there's a ton of different things that can be estimated.
Many IPOs slide below the initial price. This isn't a SpaceX thing.
If the NASDAQ changes their inclusion rules to court SpaceX... it sort of does become all about SpaceX.
> an ideally priced IPO
Ideally priced from the perspective of pre-IPO investors.
This seems like an argument for outside investors not to buy IPO stock.
There is no should or should not.
Look at the financials and the price, and you as an individual get to determine if it's worth buying (or selling).
What do you mean by this? The person you responded to never used the words "should" or "should not", and then you basically repeated what they said using more neutral words...
What is so controversial about saying that SpaceX seems overpriced?
His point is that sellers can do whatever suits their interests best, they don't have a duty to pick a fair price. And that it's on the buyer to decide whether to accept it or reject the price.
Duh? That point was actually implied by my initial comment.
Nobody said anything about fairness or duty.
My point was that if the seller is trying to maximize its self-interest by maximizing the IPO price, leaving no room for growth after IPO, then buyers probably want to take a pass at that price.
>If it drops, then I am not sure what the implication is exactly?
Surely you understand it's inverse of an IPO that jumps after intro, right?
SpaceX is not seen by investors as worth its price. This is because it is not.
All of the IPO banks have a public position that SpaceX is actually undervalued and should be at least $200. (Are they telling the truth? lol.)
There’s still really nothing keeping it at even these lower levels except pure hype. By the fundamentals typically applied to aggressive growth companies a “sane” price is closer to $40-60 and even that would be very aggressive considering the company’s financials.
If the company doesn’t quickly show a financial picture that matches the sky high pro forms then even anything close to those levels will become extremely hard to justify.
Anyone buying IPO for short term gain would have exited at initial spike, others (like me got in at allocation price) will be holding for a decade or two so this is noise, expected not sure why it posted here, do we post every tech stock intra day price move
And I don't understand why a serious media outlet is covering this at all. The entire article could be irrelevant the next day.
Without any actual, meaningful news coming out of the company (important financial update, new product, bankruptcy etc), stock price moves are only meaningful to day traders, not anyone who is doing serious investing. LA Times is making themselves the same as CNBC or sources you find on Yahoo finance.
The sheer scale of global fiber optic, 5G, and FWA deployments is rapid enough along with middle distillates (jet fuel) getting rekt.
Something like 100k flights cancelled. Upgrading the planes to have starlink is onerous, high idle/offline time, and capital intensive.
The total potential market for Starlink shrinks by at least a few hundred thousand people each week.
SpaceX blasting up and dropping right back where it started feels appropos.
It landed back where it started.
Seems very appropos.
Right on time for https://arstechnica.com/space/2026/07/how-hard-is-it-to-buil...
something something about fools and their money are easily parted.
I think people around here just dislike Elon Musk for his politics and are rooting for his stuff to fail at every turn.
I think SpaceX has a great future ahead of it.
I didn't buy a single share.
I always wonder why not more companies are using more creative approaches like Google's Dutch auction to set their IPO price.
It seems direct listings gained some popularity but overall most companies seem to rely on the traditional underwriter model.
According to [0] -
> 22 companies went public on major exchanges using IPO auctions in the U.S. between 1999-2008, but there have been none since then, as of May 2025. Starting in 2018 when Spotify went public, there have been at least 20 companies that have gone public using a direct listing. With both IPO auctions and direct listings, underwriters do not have discretion to allocate shares to their preferred clients.
[0] https://en.wikipedia.org/wiki/OpenIPO
The Dutch auction wasn't all that smooth, with Google having to adjust prices at the last minute. Most results show that it didn't really produce all that much of a benefit over a traditional IPO, where (the issuing company) at least gets a guaranteed minimum amount of money to raise. Pretty much the only alternative is a direct listing for companies that want to go public, but don't need to raise money. (Well, there's also SPACs, but that's a different beast).
When banks, pension funds and other institutional investors are fighting to outbid each other to get a slice of your IPO why would you care about finding an accurate value and being "fair"? Whether the price goes up and down post IPO isn't really the company's concern. They already have the cash.
thats been replaced with spac deals
also: can't pump the ipo and get exit liquidity for vc through a dutch auction
Google's process produced a price of IIRC $85/share and on first-day trading soared to >$100 so there was a lot of discussion at the time about how efficient that process was.
But really that's how all IPOs work, basically. You have one of more investment banks that underwrite the offering. They're basically guaranteeing to sell a certain number of shares to their clients at a given price. Those clients can be institutional investors, pension funds, high net worth individuals and so on. But there's a feedback loop here where clients might push back on a certain price.
IPOs love these sorts of investors because they tend to buy and not sell. If everyone sells the IPO will flop. Retail investors are far less "loyal".
The IPOing company also has levers where they can manipulate the price, most notably on the supply side ie by limiting or expanding the size of the float. SpaceX's float (as a percentage of the company) was actually really small.
What's unique about the SpaceX IPO was that it would immediately become one of the world's most valuable listed companies so there'd be a lot of induced demand from index funds. The underhanded (IMHO) aspect to all this was that the rules were deliberately changed so passive investors would be exposed almost immediately rather than first allowing some form of price discovery by the market. NASDAQ capitualted. S&P did not.
I guess the real manipulation here is the fiction that SpaceX is an AI company, which ultimately goes back to a series of bailouts for terrible decisions going back to the Twitter purchase. SpaceX's AI pitch was orbital data centers, which make no sense, and using their ill-gotten NVidia chip allocations to rent them to Google.
As reported in The Shovel: https://theshovel.com.au/2026/06/29/factory-that-makes-world...
Mid-August there’s a shareholder unlock of 20%, we haven’t seen the dip yet.
only if other investors "catch" it...
Ive never understood why so many people seem to cheer for Elon's companies to fail.
Because he's a psychopath who is actively making the world worse. Anyone who stands on stage with a chain saw and cuts US AID with a smile on his face is a truly horrible person. Anyone who hoards a trillion dollars while others starve is a truly horrible person. Did you root for the Empire in Star Wars? I hope nothing but the worst for him so maybe someone with a conscious and a soul replaces him.
https://en.wikipedia.org/wiki/Schadenfreude#Psychological_ca...
IPOs are generally not a good investment, at least not relative to average market return:
> However, a year later, we see that the majority of companies are either outperforming or underperforming the market by more than 10%. We also see that more companies are underperforming than beating the index (the red bars stretch below the 50% line).
> That seems to indicate that for some companies, the initial IPO enthusiasm wanes or expected earnings are not met, and investors reprice the IPO to reflect the actual, slower growth of the company.
> Three years after their IPO, we calculate that almost two-thirds of IPOs are underperforming the market, with most (64%) more than 10% behind the market’s returns.
* https://www.nasdaq.com/articles/what-happens-to-ipos-over-th...
> 56% of IPOs bought at the offer price lost money after 3 years. That number rises to 57% after five years. The numbers are higher when bought at the first day closing price: 60% lost money after 3 and 5 years. Worse than a coin flip.
> Only 19% of IPOs doubled or more after three years and 22% after 5 years when bought at the offering price. The numbers were worse when bought at the closing price.
> Of course, the lottery-like returns were possible, but it amounted to about 0.4% of all IPOs after 3 years and 1% after five years.
* https://novelinvestor.com/the-hype-and-hot-air-around-ipos/
Interview with a researcher that has looked at IPOs over the last few decades:
> We’ve previously compared IPOs to lotteries that are prone to inflated valuations and low returns. Today we welcome “Mr. IPO,” Professor Jay Ritter onto the show for a deeper dive into IPO performance, for his insights into SPACs, and to hear his research into why economic growth doesn’t correlate with stock returns. Early in the episode, Jay unpacks how long-term IPO returns perform against first-day trading. While exploring the role that venture capital plays in tech IPOs, Jay talks about why negative earnings don’t affect tech IPOs in the short-term before sharing how skewness factors tend to impact young companies. Reflecting on how IPOs are usually underpriced, Jay discusses how the interests of companies are not aligned with the interests of IPO underwriters. After looking into IPO allocation, Jay compares the 2020 ‘hot IPO market’ with the internet bubble of the late 90s. Later, we ask Jay about what special-purpose acquisition companies (SPACs) are and why they’ve exploded in recent years. His answers highlight their investing benefits, risks, and why SPACs might be a better option for companies than IPOs. We examine how SPACs have historically performed and then jump into our next topic; why economic growth isn’t a good indicator that a country is worth investing in. He touches on why returns don’t correlate with economic growth, the place of capital gains and dividend yields when investing abroad, and how innovations in an industry can lead to higher stock returns. We wrap up our conversation by asking Jay for his take on whether the stock market is efficient before hearing how he defines success in his life. Tune in to hear our incredible and informative talk with Jay Ritter.
* https://rationalreminder.ca/podcast/139
Picking individual winning stocks can be hard:
* https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street
Many IPO's have the same trajectory that SpaceX did - first going up steeply and then dropping steeply. So there's certainly money to be made if you get the timing right but that is always the challenge.
Worth considering that "trading" and "investing" are different words. :)
Looks to still be over a trillion market cap.
If the IPO can't find institutional buyers at the price and has to resort transferring the initial shares directly to the public, safe to assume they've hyped the public into being the bag holder. What SpaceX did is rare for a reason.
This was completely predictable. Anyone with a brain looking at this stock would have shorted it.
noooo my stonks
Maybe this has to do with the technical unfeasibility of sending human to Mars and back to earth while keeping them alive ? Throwing billions at it won't make it happen magically.
shocking, who could have predicted that?
Still 10x higher than any rational price.
And I had to scroll all the way down here to find a post that wasn't high octane copium.
Typical IPO pattern. Hyped IPOs shoot up and then correct, some correct more than others. Traders take their profits. Nothing new here, just bigger headlines because it's a big name. The bigger the name, the bigger the hype.
Not really, it got turbo charged to Nasdaq which involves some involuntary investments.
Could be a great buying opportunity depending on your theory of investment.
This line of thinking could be applied to literally any company in the world, even to Spirit Airlines 5 minutes before it went out of business.
> closing at $135.27
ffs, wake me up when it's at least 10% below what it IPO'd for. The idiotic tulip mania that followed in the few days after it floated was noise, but as of today, it seems the IPO price was pretty much right. However, endless headlines about the price crashing etc.
From a fundamentals perspective, it's an insane price, obviously. But the narrative that it's all coming crashing down is obviously not correct (today).
I’m really tempted to buy a chunk right now lol
Do yourself a favor and DCA in from here. SpaceX was "only" valued at 210 Billion back in June 2024, around 11% of its current valuation. A return to that valuation would take it down to ~$16/share!
SpaceX is a phenomenal company. I've wanted to buy in since 2009. But the stock is the exact inverse of my ideal single-stock investment thesis--huge downside with severely limited short-to-mid-term upside, given the huge premium already being paid.
Maybe take a look at Rocket Lab :)
Me too, and not for any rational reason or because I value my money or my investing strategies, but simply because I have a high risk tolerance, and it seems like these days that’s all you need to make money.
No real skill, no real research. Just ride the hype train, shrug if you lose, and never gloat when you win. Simply take the profit, stfu, and buy a Porsche or some RAM.