SpaceX: A Broker’s Perspective

According to the latest reports, US$75 billion will be the free float raised in the IPO, which is about 4.3% of the US$1.75 trillion valuation estimate. Investors will be drawn by the lure of the company’s enormous IPO valuation, but that’s the entire pizza – traders are going to be fighting over a couple of bites of one slice.

What’s more, those lucky enough to secure an allocation of the US$75 billion raise are unlikely to be hovering over the sell button on the open – like any market, these potential sellers have to offer their stock up for transactions to take place.

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Scarcity, not valuations, will be driving the price

When chip maker ARM Holdings listed in 2023, it had a 10% free float, with SoftBank holding onto the remainder. It priced its IPO at the top of the range at $51, with an opening sale of $56.10 and a day-one close price of $63.59 – up almost 25% on day one. Regardless of volume, whatever the last trade price is at 4 pm in New York will determine the SpaceX valuation. In the case of ARM, we were talking tens of billions; in the case of SpaceX, we’re talking trillions.

So, the question will be, with this estimated 4.3% of SpaceX’s free float potentially available, where will sellers place their offers in the screens? Will it be 25% higher than the IPO price? 35%? Who knows – but with the celebrity status of this IPO and its world-first trillionaire owner, we should expect the unexpected! This turns us to the question of demand dynamics.

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The retail, wholesale and institutional demand for SpaceX

While the retail euphoria relating to SpaceX will be huge, it certainly doesn’t stop there. The world’s largest index providers are rewriting the rulebooks when it comes to the inclusion of tech stocks that are set to IPO in 2026. In anticipation of the debut of SpaceX, OpenAI and Anthropic, Nasdaq has approved a fast-entry mechanism of just 15 days to its Nasdaq 100 flagship index, S&P is cutting its 12-month waitlist in half, and FTSE Russell has moved the same way, allowing for fast entry after the fifth trading day following the IPO.

There are over 14,000 ETFs trading worldwide, representing around US$20 trillion in assets under management, many of which naturally include the US mega-caps. Clients of ETFs that track these underlying indices will be desperate to include SpaceX – if this stock isn’t included in their ETFs, investors are going to move to where they can get exposure.

Wholesale and institutional fund managers also rely on index constituents to form ‘beta’ returns – those that mirror broader markets, from which they then make inclusions and custom weightings to achieve ‘alpha,’ or outperformance of their benchmarks.

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Conclusion

Up until this point, you’ll notice we’ve completely ignored valuations. The hype will matter on day one, and just like demand from the likes of the Ark Innovation ETF helped drive Tesla’s share price in the short-to-medium term, we can expect that hype to be sustained for a period. Even though Tesla’s share price is currently hovering at its 2021 highs, it still trades at a 381 price-to-earnings (P/E) multiple.

SpaceX’s 2025 full-year revenues were US$18.7 billion, putting its anticipated $1.75 trillion valuation at a price to revenue ratio of 94 times. Come down a little closer to earth, and you’ll be pricing it on a multiple of earnings – SpaceX’s 2025 statutory earnings were a net loss of US$4.9 billion, but even if we use the adjusted EBITDA of US$6.6 billion, that’s still a 265 P/E multiple. (Microsoft trades at a P/E multiple of 25.5x.)

Economist John Maynard Keynes famously said, “The market can remain irrational longer than you can remain solvent.” SpaceX certainly has all the ingredients to challenge anyone willing to bet that sensible valuations will prevail.

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‌*Prices & data sourced from Webull, Nasdaq, LSEG

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Analysis by Alfred Tang, Head of Trading at Webull Australia