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Are SpaceX Shares Attractive? The Answer Depends Entirely on Which Year After the IPO You Buy Them
🇨🇭 Switzerland /Technology

Are SpaceX Shares Attractive? The Answer Depends Entirely on Which Year After the IPO You Buy Them

From Neue Zürcher Zeitung · () German

Translated from German, summarized and contextualized by DistantNews.

At a glance

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  • SpaceX is set to go public in June with a projected valuation of $1.8 trillion, but its attractiveness as an investment is highly dependent on the timing of purchase.
  • The company is currently unprofitable, making traditional valuation metrics difficult to apply, and its stock is expected to be highly volatile, similar to Tesla.
  • Investors are advised to wait for a potential discount after the initial public offering (IPO), as early investors may be disappointed by short-term performance.

SpaceX, Elon Musk's ambitious space exploration and artificial intelligence company, is preparing for its initial public offering (IPO) in June, with an anticipated market capitalization of $1.8 trillion. This valuation places it between Meta and Taiwan Semiconductor Manufacturing, but the company's profitability remains a significant question mark.

As SpaceX is currently operating at a loss, traditional financial metrics for assessing stock value are not readily applicable. Analysts point to the price-to-sales ratio, which exceeds 100, as an indicator of an "absurdly high" valuation. Despite these concerns, the potential of the space industry and SpaceX's near-monopoly position suggest that the stock could become attractive over time.

Yes, but it depends on which year after the IPO we are talking about.

Answering a reader's question about whether to buy SpaceX stock after its IPO.

However, potential investors are cautioned about the stock's inherent volatility. Musk's recent decision to merge SpaceX with his AI company X.AI (which includes the social media platform X) and persistent rumors of a potential merger with Tesla introduce significant uncertainties. The proposed merger with Tesla, which is increasingly focusing on autonomous driving and humanoid robots rather than solely electric vehicles, could further complicate SpaceX's financial outlook.

Given these factors, including Musk's 85% voting control at SpaceX and his famously volatile personality, significant price fluctuations are expected. A Bloomberg columnist suggests that investors who exercise patience may be able to acquire SpaceX shares at a substantial discount to the IPO price. This strategy mirrors the experience of Tesla investors, who have witnessed extreme volatility with numerous large gains and losses since November 2021. Therefore, while SpaceX may eventually prove to be a worthwhile investment, buying in immediately after the IPO might lead to disappointment, with later purchases offering a better chance for capital appreciation.

SpaceX will disappoint those who buy shares at the IPO. However, those who acquire them later at a greater discount have a chance for price gains.

Advising potential investors on the timing of purchasing SpaceX stock.
DistantNews Editorial

Originally published by Neue Zürcher Zeitung in German. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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