SpaceX continues to incur losses, yet its valuation has reached 1.8 trillion yuan: How has Musk sold “faith” at such a high price?
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The largest IPO in history is about to debut. Elon Musk plans to raise nearly $75 billion by listing SpaceX, pushing the valuation of this persistently loss-making company to around $1.77 trillion, with hopes of becoming the world's first trillionaire. What supports this feast is a carefully cultivated retail investor faith—rather than traditional financial fundamentals.
According to The Wall Street Journal on the 10th, SpaceX shares are expected to officially list on Friday, with a targeted offering price of $135 per share. Musk has reserved about 20% or more of the IPO allocation for retail investors, far surpassing the industry norm of 5% to 7%, and major brokerages generally expect demand to greatly exceed supply. Nasdaq has agreed to grant SpaceX a fast-track channel, allowing its inclusion in the Nasdaq 100 index just 15 trading days after listing; the S&P 500 index, on Thursday, rejected a similar application citing earnings requirements.
The core contradiction of this IPO is: SpaceX had a net loss of $4.9 billion last year, and the loss has expanded further in the first quarter this year, but at the targeted offering price, the company’s price-to-sales ratio is as high as approximately 93.6 times, far exceeding the S&P 500’s average of about 3.3 times. What supports this sky-high valuation is Musk’s vision of interstellar migration and artificial intelligence, rather than current financial figures.
Nasdaq 100's fast track means SpaceX stock will almost immediately enter the index funds held by tens of millions of ordinary American households. Meanwhile, phased unlocking of restricted shares will allow more shares to enter the market earlier than usual, potentially exerting downward pressure on the stock price. Professional investors warn that the most enthusiastic retail subscription in history is fueling extremely volatile post-listing performance.
The Rise of Retail Investors: A New Force in Market Pricing
In the past five years, retail investors have risen from the margins of the market to an undeniable pricing force. According to Citadel Securities, retail trading volume for stocks and options in May both hit historic highs.
This rise has its historical context. In 2013, Robinhood launched commission-free trading apps, allowing ordinary investors to participate in the stock market at very low thresholds for the first time. During the pandemic, home isolation combined with government subsidies spawned a new generation of day traders, culminating in the meme stock frenzy that stunned Wall Street—stocks like GameStop were pushed to astonishing heights by retail investors, an event that also caught Musk's attention.
Today, retail influence has spread to the IPO market. Robinhood CEO Vlad Tenev said this spring that previously, his company had to "beg" issuers to allocate IPO shares to their platform, but now, "almost every major IPO already appears on Robinhood." After SpaceX's prospectus was made public on May 20th, Charles Schwab’s IPO page traffic immediately tripled. Apex Fintech Solutions chief market analyst Mike Treacy called the current situation "the perfect storm of retail mania."
Musk’s Retail Investor Affinity: From Promise to Fulfillment
Musk understands how to mobilize retail investor enthusiasm. At Tesla, retail investors hold about one-third of the shareholder base; it is precisely this belief and enthusiasm that supported Tesla’s market value to surpass the combined value of the world’s 30 largest automakers—even though it only ranks 12th in U.S. car sales.
In 2020, Musk once wrote in a tweet:
"I am a huge fan of small retail investors. (If SpaceX or Starlink go public,) I will make sure they get first priority. You can take my word as proof."
This IPO, Musk has at least partially fulfilled this promise. To further lower the participation threshold, Robinhood imposes no minimum account balance for the SpaceX IPO; Fidelity, which normally requires IPO-participating accounts to hold $100,000 to $500,000, has dropped the threshold to $2,000 for this event.
Financial institutions also smell opportunity. According to media citing insiders, Merrill Lynch’s Houston branch held a SpaceX IPO information session for clients last week, where attendees received baseball caps emblazoned with the SpaceX logo.
Valuation Mystery: Sky-High Price Supported by Faith
SpaceX's financial profile presents a striking gap with the market valuation it’s receiving. Last year the company posted revenue of $18.7 billion and a net loss of $4.9 billion, with losses expanding further in the first quarter. At the targeted offering price of $135, the company is valued at about $1.77 trillion, corresponding to a price-to-sales ratio of about 93.6 times. By contrast, the S&P 500 as a whole has a price-to-sales ratio of about 3.3 times.
The core logic driving valuation comes from future vision. According to The Wall Street Journal, Morgan Stanley forecasts that SpaceX's revenue could reach $3.4 trillion by 2040.
Several Wall Street veterans point out that retail investors are unlikely to carefully read price-earnings ratios or cash flow analyses before clicking 'buy,' and are more likely moved by Musk’s long-term vision—rockets, robots, AI, and space data centers. Fintech entrepreneur Deen Noory, 41, has decided to buy in on listing day, saying:
"This is an infinitely vast industry steered by Elon Musk—what’s there to think about?"
Fast Nasdaq Inclusion: Risks Entering Millions of Households
Nasdaq’s fast-track inclusion for SpaceX compresses the waiting period from the usual maximum of one year to just 15 trading days. This means SpaceX shares will almost immediately appear in index funds held by ordinary American families.
The S&P 500 on Thursday rejected a similar application, insisting on its profitability requirement—SpaceX, with a net loss of $4.9 billion, does not yet meet the criteria.
In addition, SpaceX has scheduled phased unlocking of restricted shares, meaning more shares will enter the market earlier than typical new listings, possibly adding extra pressure to the stock price. The current market is also turbulent: last week’s rapid reversal in semiconductor stocks caused the Nasdaq Composite Index to fall 4.2% in a single day, the biggest single-day drop in more than a year.
Institutions Profit, Retail Takes Over?
During more than twenty years of private operation, SpaceX has undergone multiple rounds of financing; institutional investors—including the world's largest asset managers, mutual funds, and major endowments—have long invested heavily. Over the past several years, the company’s valuation has grown more than 2000%, with ordinary investors largely missing out on the entire wealth accumulation process. Critics argue that the easy appreciation period is over, and institutional investors are now looking for successors.
"I think most retail investors should stay away from this stock like avoiding the plague," said veteran fund analyst Dave Nadig, who expects extreme volatility for the stock in the weeks after listing. Historical data collected by Professor Jay Ritter, emeritus at the University of Florida, shows that about one-quarter of IPO stocks lose at least half their value within three years of listing.
Maryland financial planner Jeff Judge was blunt:
"Most of the interest is emotionally driven, to be honest. People just want to own a small piece of Elon Musk’s rocket company."
The conflicting sentiment of retail investors is reflected in two sharply contrasting voices. North Carolina sales manager Josh Hill plans to stand by Robinhood on listing day, but admits, "Unless the price drops, I probably won’t buy." Meanwhile, 70-year-old retired doctor Randal Brown is resolute: "Musk is a superstar. Everything he touches succeeds."
Risk Warning and DisclaimerThe market comes with risks; invest cautiously. This article does not constitute individual investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinion, viewpoint, or conclusion herein is appropriate for their specific circumstances. Investing according to this is at your own risk. ```