When the "fear of missing out" overwhelps rational valuation frameworks, a potentially record-breaking IPO is testing the limits of the entire market. SpaceX is seeking a public listing with a valuation exceeding $2 trillion, translating to roughly 100 times its revenue. This figure has forced some analysts to look beyond traditional valuation models, instead betting on the "option value" of Elon Musk's vision for space data centers, lunar bases, and even Martian colonies. The driving force behind this fervor is less about financial logic and more about a primal market emotion: the fear of missing out on the next Tesla. Michael O'Rourke, Chief Market Strategist at Jonestrading Institutional Services with over 30 years of experience on Wall Street, states bluntly:
This is the kind of scene you witness at market tops and during bubbles. Looking back a year from now, I believe this will stand as a key signal.
Aswath Damodaran, a finance professor at New York University, points out that FOMO is currently dominating analyst sentiment:
Many analysts have pre-decided to buy SpaceX because they feel the cost of not participating in this game is too high to bear.
SpaceX plans to offer up to 30% of its shares to retail investors. If the IPO raises $75 billion, the corresponding retail subscription amount could reach $22.5 billion. According to Vanda Research, this figure would surpass twice the total net purchases by retail investors in Tesla over the past year, and even exceed the total flow of retail capital into all asset classes over the past month.
Valuation Logic: From Car Company to "Option Value"
Understanding SpaceX's valuation is impossible without considering the path Tesla has taken. Tesla's stock has surged over 2700% in the past decade, leaving countless skeptics empty-handed and establishing a solid credit endorsement for Musk in the capital markets. Today, few sell-side analysts genuinely focus on Tesla's core automotive sales business—despite the company planning over $25 billion in capital expenditures this year. More than twenty analysts with Buy ratings list the Cybercab autonomous taxi and the humanoid robot Optimus as the central pillars of their valuation. In a May 10th report, Piper Sandler analyst Alexander Potter wrote that auto sales are merely a "secondary long-term revenue source," stating that "Tesla is not a car company." His projections indicate that for decades to come, Robotaxi operations, Full Self-Driving (FSD) licensing and subscriptions, and insurance will constitute the main revenue streams, with vehicle sales expected to peak in about five years. The SpaceX narrative is built on a similar logic but is even more speculative. Beyond government rocket launch contracts and the Starlink satellite internet service, the implied $2 trillion valuation encompasses businesses still in the conceptual stage, such as space data centers, lunar bases, and Martian colonies. The theoretical total addressable market is "limitless"—at least in the eyes of believers.
Valuation Views: A Wide Spectrum of Opinions
Institutional investors' assessments of SpaceX's value show clear divergence. Ark Investment Management, an existing SpaceX investor, stated in an April 20th article that a $1.75 trillion valuation is "based on a credible business development path," noting that "Musk's goals are ambitious by any historical standard, and SpaceX has repeatedly demonstrated its ability to compress timelines." The Scottish Mortgage Investment Trust, managed by Baillie Gifford which holds nearly $4 billion in SpaceX shares, marked its SpaceX holding at a valuation of $1.25 trillion at the end of the first quarter. This position represents about one-fifth of the fund's total assets. The trust indicated it would reassess the valuation as the IPO process advances. Damodaran suggests a reference price point of around $1 trillion. He would not buy at $2 trillion but acknowledges SpaceX has significant upside potential. "SpaceX is currently far ahead of its competitors and is in a much better position to deliver on its option value than Tesla is today," he said, also giving credit to Musk's achievements: "You have to give him credit for creating two companies that are truly technological marvels."
The Skeptics: Paying for Success Not Yet Achieved
However, not everyone believes FOMO is a sufficient reason to invest. O'Rourke's skepticism targets the numbers themselves: a $2 trillion valuation against roughly $20 billion in annual revenue implies a price-to-sales ratio of about 100x. "What you're paying for is success that hasn't been realized," he said. "Even if space data centers become a reality, investors have no basis to judge whether their costs will be more efficient than terrestrial facilities." UBS analyst Joseph Spak has warned about the capital costs of Tesla's physical AI infrastructure, noting that the $25 billion in capital expenditure is just a starting point. He also observed that Musk's language regarding the progress of Robotaxi and Optimus on the April earnings call was "incrementally more conservative." For O'Rourke, the truly concerning signal is not just SpaceX's valuation in isolation, but the collective market willingness to accept it. "When we look back a year from now, this is likely to be a key historical marker," he concluded.
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