As Elon Musk’s SpaceX prepares for its highly anticipated Initial Public Offering (IPO), analysts are sounding the alarm on the company’s valuation. With a potential market capitalization of $2 trillion, some investors are warning that the commercial space flight giant may be overvalued.
The Juice Has Been Squeezed
According to Bryn Talkington, a managing partner at Requisite Capital Management, the value of SpaceX has already been largely priced in, leaving little room for strong returns on investment. “I think the juice has been squeezed from this orange,” she said, citing the company’s $16 billion revenue as a concern. Another analyst, Stephen Weiss of Short Hills Capital Partners, shared similar sentiments, stating that investors would not be able to generate returns at a $2 trillion market cap. “It’s got to go to $3 trillion… it’s ridiculous for one of the largest companies in the world on that revenue base,” he said.
Musk Denies $2 Trillion Valuation
Despite reports suggesting that SpaceX is targeting a $2 trillion valuation, Elon Musk has denied these claims. However, he has confirmed a $1.75 trillion valuation for the company. SpaceX aims to raise over $75 billion via its IPO, which is set to become the largest IPO in history.
Recent Developments
The Nasdaq 100 has adopted a series of rule changes that could help SpaceX enter the index within 15 trading days. These changes update the methodology for calculating a company’s market capitalization, including both listed and unlisted shares.
Potential Impact on Tesla
The looming SpaceX IPO could trigger a sell-off in Tesla Inc. stock, according to TV host Jim Cramer. A J.P. Morgan analyst has shared a bearish “sell” rating on the stock, predicting a 60% decline in value. Cramer warned that this could lead to investors selling Tesla to buy SpaceX.
Concerns Over Market Impact
Cramer also expressed concerns that the SpaceX IPO, coinciding with the potential public debut of artificial intelligence companies OpenAI and Anthropic, could drain capital from the broader market. He urged the debuts to be “spaced out” to avoid a negative impact on the market.