Breakfast News: The Ultimate Guide to SpaceX's IPO

Breakfast News: The Ultimate Guide to SpaceX's IPO

June 11, 2026

| Wednesday's Markets | | --- | | S&P 500 7,267 (-1.62%) | | Nasdaq 25,170 (-1.98%) | | Dow 49,919 (+1.87%) | | Bitcoin $61,863 (-0.17%) |

Source: Image created by Jester AI.

Should You Buy SpaceX on Friday?

Short answer: Not yet. The history of big IPOs in booming markets makes this one of the easier calls we've had to make.

SpaceX (SPCX +4.15%) may be the most exciting IPO in history, yet we definitely will not be buying on Friday.

Let us explain. We'll start with a market view.

The Nasdaq is trading above the 90th percentile across every valuation since its founding in 1971. Growth stocks (like SpaceX) have been cheaper 90% of the time over the last 55 years.

Why does market pricing matter here?

Because large, dramatic IPOs offered in expensive markets have a remarkably consistent track record of giving patient investors multiple times to buy at a much better price.

Now let's look at the business.

This Company Is Very Real

SpaceX does two things better than anyone on Earth.

First, it launches rockets with otherworldly effectiveness. More than 80% of everything that humanity puts into orbit flies on a SpaceX rocket, with 99% rates of success. Nobody else comes close.

And its Starlink business, beaming broadband through satellite internet to places that have never had it, is a rule-breaking gem. It doubled subscribers last year, grew revenue 50%, and generated cash-flow margins near 63%. (Re-read that sentence!) Hundreds of millions of rural households worldwide still lack reliable internet access. Starlink has a dramatic growth opportunity, with spectacular economics.

These two businesses are special.

But Now It Gets a Little Complicated

SpaceX's IPO valuation relies pretty heavily on the company's AI business. Here, Musk and team are renting a Memphis data center to Anthropic and Alphabet's (GOOG +0.67%) Google for about $26 billion a year combined. That's incredible. But when you read the fine print, you learn that either company can cancel the contract with 90 days' notice.

Furthermore, the AI business operates in a competitive space and is burning through cash faster than the rockets and Starlink businesses can make it. Overall, SpaceX lost $4.28 billion in a single quarter and $41.3 billion since its founding.

That shouldn't be too concerning, given Musk's success at turning Tesla (TSLA +2.23%) into a financial juggernaut. (Tesla has net savings of $37 billion on its balance sheet, and it generated over $6 billion in free cash flow last year).

The trouble is that, at SpaceX's opening valuation, investors will be paying 95X sales. When you pay 95X sales, you're not buying today's performance. No, you're discounting years of uninterrupted excellence. You're betting that nearly everything goes right, quarter after quarter, for many years.

In a market already above the 90th percentile of historical valuation, stacking that much unbridled optimism on top of SpaceX feels like the wrong move to us.

So What Do We Do?

We'll wait. We recommend Foolish investors do the same.

And, of course, remember that if you own index funds, you'll automatically be getting a material position in SpaceX. Furthermore, if you have Alphabet shares in your portfolio, you own SpaceX, as well. Around 7% of the total value of Alphabet comes courtesy of its private investments in SpaceX.

SpaceX's mission is beautiful. Its execution of satellite internet and space rockets are best in class. We just do not think now is the right time to buy.

We are placing SpaceX on our watchlist.

Tom and David Have Their Say

The chances that SpaceX shares never trade below their first-day public pricing are so very low.-- Tom Gardner, CEO and TMF co-founder

I generally have a hard time getting excited about mega-IPOs. Their sheer size guarantees enormous media attention, and it also makes it harder for me to imagine the stock becoming a 10-bagger (let alone a 100-bagger!). SpaceX is a fascinating company, though, and certainly a Rule Breaker worth following. I tend to prefer IPOs that arrive a little earlier and offer a more compelling risk-reward proposition.--David Gardner, Chief Rule Breaker and TMF co-founder

The Bottom Line

SpaceX is a marvel of engineering and a poor bargain at $1.77 trillion, so our services are watching from the ground until the price comes back down to earth.

In particular, we want to see Starship achieve orbital refueling, its AI business bring in more than it costs to run, and its price fall well below the nearly 100 times revenue it carries today.