SpaceX: Patience is a Virtue

Investing in SpaceX at its current market price presents a high-stakes trade-off between securing a piece of what could become a generational technology platform and paying an unprecedented valuation premium. Is this the deal of the century, or is it mass speculation? The company is certainly on the leading edge of some valuable technologies, but we prefer to be patient. We believe there will be better opportunities to buy SpaceX.

SpaceX (SPCX) came public just over 1 week ago at a price of $135 and surged to an intraday high of $225.64. Since then it has settled back to around $180, which translates into a market cap of $2.36 trillion. But what is SpaceX really worth?

The Pros:

• • Launch & Telecom Dominance: SpaceX currently has a functional monopoly over commercial rocket launches following the recent failed Blue Origin launch. NASA relies on SpaceX’s reusable family of rockets. The Starlink satellite business generates steady cash flow, pulling in roughly $11 billion in sales and $3 billion in free cash flow.
  • Foundational AI Model: A massive portion of SpaceX’s $2+ trillion valuation is driven by the acquisition of Musk’s xAI (the Grok chatbot) back in February. The company has secured high-profile compute leasing deals with Google and Anthropic, and recently made a massive $60 billion all-stock acquisition of the AI coding platform Cursor.
  • Forced Index Inclusion: Major indexes will need to incorporate SpaceX over varying time frames. What matters is that these indexes will have to include SpaceX regardless of valuation, which can drive the stock higher despite valuation concerns.
  • “Infinite” Addressable Market: The aspirational goals of SpaceX address a market with no realistic ceiling. In effect an ‘infinite’ market opportunity.

The Cons:

• • Huge Valuation: SpaceX reported $18.7 billion in revenue for 2025, meaning that even at its current adjusted price, it trades at over 110 times trailing sales. For perspective, the historical S&P 500 average price-to-sales ratio sits below 4.
  • Unprofitable and Burning Cash: SpaceX posted a $4.94 billion net loss last year, largely exacerbated by heavy capital expenditures and its merger with the cash-strapped xAI. Q1 2026 capital expenditures alone topped $10 billion, signaling that the $75 billion raised from the IPO may only fund two years of operations.
  • Dilution: The massive capital expenditure requirements necessary for development could be funded with more equity, diluting existing shareholders. Example, the $60 billion Cursor buyout was funded entirely through stock. That saves cash, but dilutes the ownership interest of all the existing shareholders.
  • The Winners Curse: The winner’s curse is a phenomenon where the winning bid in an auction exceeds the item’s intrinsic value, often due to emotional factors. Historically, high-profile IPOs have often suffered from the Winners Curse with better values available after the IPO.

But what if I’m Holding for the Long Term?

For long term investors, the IPO volatility could be of little relevance. Over the long run the value will be based on the company’s ability maintain its infrastructure monopoly for rockets, and the profitability of its AI model. The business must be able to scale exponentially even in the face of massive ongoing capital needs.

The 10-Year Bull Case: The Foundation of the Space Economy

If you plan to hold SpaceX for ten years and beyond, the investment relies on three primary catalysts:

• • Inexpensive Space Transportation: Starship is designed to be fully and rapidly reusable. Over the next decade, this could reduce the cost of launching cargo to orbit to levels allowing datacenters and manufacturing in space, unlocking entirely new industries.
  • Global Telecom Monopoly: By 2036, Starlink will likely have fully deployed its satellite constellations, providing the ability to capture a massive global share of rural, maritime, aviation, and military broadband traffic and produce high-margin, utility-like cash flow.
  • Off-Earth Infrastructure: SpaceX is poised to become a vital asset for western aerospace and defense infrastructure. SpaceX is potentially the sole logistics provider for NASA’s Artemis program and Mars missions.

The 10-Year Bear Case: Structural Risks of Deep Space CapEx

A decade-long commitment also exposes your capital to severe operational and structural bottlenecks:

• • Capital Investment Needs: Reaching Mars or establishing industrial orbital infrastructure requires hundreds of billions of dollars in capital expenditure. SpaceX may spend the next 10 years burning every dollar of Starlink profit just to fund Starship development. This dynamic could delay true net profitability and cash distributions to shareholders well into the 2030s.
  • Continuous Share Dilution: Over a 10-year period, repeated multi-billion dollar stock issuances for tech acquisitions or additional funding rounds to support capital expenditures could significantly dilute existing shareholders.
  • Key-Man Risk: Ultimately, investors are betting on the genius of Elon Musk. SpaceX’s strategic vision and institutional backing are tightly tied to Elon Musk, creating a very substantial key man risk for shareholders.

The Verdict

At its current price of $185 SpaceX is priced for absolute perfection. If you believe the company will successfully establish orbital data centers, scale Starship, and dominate AI software, it represents a rare opportunity to own the future of infrastructure. However, the sheer size of its current net losses and massive capital needs suggest that waiting for the post-IPO volatility to settle may be the safer path. The price can make a significant difference to your returns.

If we assume a price of $1,000 in ten years, and you bought at the IPO price of $135, your IRR is about 22%, but if you bought at $225, the recent high, your IRR would only be 16%. We think there will be better buying opportunities. Be patient.

Have a great week!

What We’re Reading

• Pentagon releases 3rd batch of UFO files, detailing mysterious orb sightings: “Are you seeing this?”

• Markets are set for a much more hawkish Warsh Fed than expected

• The average SpaceX buyer post-IPO is almost under water after two-day slide

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The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. You should consult your attorney or tax advisor.

The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

All information has been obtained from sources believed to be dependable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

All information has been obtained from sources believed to be dependable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such.

The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that no such statements are guarantees of any future performance, and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

Past performance is no guarantee of future returns.

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By: Adam