Have You Invested In SpaceX Yet?

It seems like everybody else has. I haven’t seen this much hype since Facebook/Meta went public in 2012. But is it a good idea to jump on the SpaceX bandwagon right now? Or for that matter any IPO in general? 

If you really want to invest in a single company rather than investing in a more diversified segment of the capital markets, due diligence suggests you should at least look at the company’s fundamentals. The first metric that jumps out for SpaceX is its P/E ratio of -73. It’s a negative number. That means the company is losing money. While that’s certainly a red flag for any company, a P/E ratio may not be particularly useful for evaluating a new company with negative profitability. Perhaps its Price to Sales ratio is a better measure. That metric is currently at 109. By contrast, the average Price to Sales ratio for other companies in the aerospace industry is a little over 2. In other words, you’d have to pay about 55 times more per dollar of sales to invest in SpaceX than to invest in a company like Boeing (current Price/Sales 1.9).

There are lots of other measures that you can use to evaluate SpaceX, but almost all of them point out the extremely high valuation of its stock. At today’s price a buyer would have to believe that this company will be generating dozens if not hundreds of billions of dollars of profit in the not-too-distant future.

Something else that IPO investors may also not have considered: most of the shares of each of the existing large-cap companies’ stock in the U.S. stock market are available for trading every day. The New York Times estimates that number to be over 90% of their outstanding shares. But only about 5% of SpaceX’s total shares are currently tradeable. The rest are held by the company’s founders, early investors, and employees. If a large number of those privately held shares were suddenly put up for sale, that could drive the stock price down. Imagine hundreds of employees dumping hundreds of thousands of shares of SpaceX stock next year in order to fund bigger homes.

Then there’s the potential for SpaceX’s stock valuation to topple if something were to happen to Elon Musk. How much of investors’ willingness to pay a sky-high price for its stock comes from their reliance on his unique magic?

What about IPOs in general? Can we learn anything from their historical performance? Nasdaq published a study on that topic in 2021 (see https://www.nasdaq.com/articles/what-happens-to-ipos-over-the-long-run-2021-04-15). They found that returns right after an IPO tend to be positive but turn negative in the longer-term. On average, almost two-thirds of IPOs have underperformed the market after three years. See the chart below.

You may still feel that investing in SpaceX is a good idea. And even if you missed out on the IPO, don’t fret. Both Nasdaq and CRSP, two equity index companies, have decided to change their rules to include SpaceX. You’ll soon be able to purchase a slice of SpaceX in common ETFs such as QQQ or VTI. And in a much more diversified way as well.

Sources:

https://www.investing.com/equities/spacex-ratios 

https://finance.yahoo.com/quote/BA/key-statistics/ 

https://www.nytimes.com/2026/06/11/business/spacex-ipo-investing.html?campaign_id=12&emc=edit_my_20260615&instance_id=177217&nl=your-money&regi_id=73772327&segment_id=221548&user_id=2bf133e842d490c4abff27dc135e6e40