What About SpaceX?
I’ve been investing since the 1980s. Investing is the buying of an asset that you intend to keep for decades. Which brings me to the recent SpaceX IPO. Over the last 30 years, many businesses have gone public with losses. Some of them turn into successes. Many do not.
Nvidia is an established company and a recent AI success story. Their CEO made calculated bets 20 years ago that are paying off. It's trading at 31 times earnings and 21 times profit. These are actual, not forecasted, results.
A $10,000 investment in Nvidia stock on June 15, 2015, is valued at $2,204,870 on June 19, 2026. The compound annual growth rate (CAGR) of that investment has been 62.97%. Another way to think about it—the investment doubled in value every 15.5 months. Let’s compare SpaceX to Nvidia.
SpaceX's revenues are $19 billion annually. Their prospectus claims it has an addressable market of $28 trillion. The company's not promising anything like NVIDIA's 62% CAGR.
Its stock price on June 19th is $185/share. Its market capitalization is $2.43 trillion. Its revenues are $19 billion, and it loses money—$4+ billion per year. Let’s ignore that for now and focus on revenues. SpaceX’s price-to-sales ratio is 127.9. Nvidia is trading at 21 times revenue.
Musk’s ability to imagine futures and innovate is legendary, but the numbers are daunting. The current revenue valuation requires Jim Jones cult-level faith.
Do you think SpaceX is much better than Nvidia at its current price? Do you think it could be much larger than Nvidia a decade from now? Do you think it will be more profitable than Nvidia, Apple, or Microsoft in the next decade? The odds of SpaceX even becoming profitable by 2030 are slim. They will likely sell more stock and take on more debt between now and the end of the decade. Building data centers in outer space is an expensive proposition.
Who benefits now? Wall Street investors who acquired pre-IPO. Early private equity investors. Company employees, and Elon Musk. The prospectus shows that Musk owns 849,490,000 of SPCX common stock. If SpaceX's stock price falls 90% from its current price, Musk's shares would be worth only $15.7 billion. That’s not a terrible outcome what would become a dismal failure.
You need to be a committed investor to buy SpaceX at the current price, but your failure mode will be less lucrative than Musk's.