SpaceX (SPCX -2.68%), the aerospace and AI company founded by Elon Musk, will go public on June 12. It aims to raise $75 billion at a valuation of $1.77 trillion, making it the largest IPO in history. It's also reportedly more than four times oversubscribed. That's a lot of pent-up demand, but I wouldn't touch it for four simple reasons.
1. It's overvalued
In 2025, SpaceX's revenue rose 33% to $18.67 billion. At its target IPO valuation, it would debut at 95 times last year's sales. Therefore, it could easily start trading at over 100 times sales.
Image source: Getty Images.
Even if SpaceX's revenue rises another 33% to $24.83 billion in 2026, it would already be valued at 71 times that estimate. Analysts expect its smaller competitor, Rocket Lab (RKLB -8.70%), to grow revenue by 52% this year, yet it trades at just 67 times that forecast.
2. It's unprofitable
SpaceX generates most of its revenue and all of its operating profits from Starlink, its satellite internet service. In the past, Starlink's profits offset its space division's losses.
But earlier this year, SpaceX integrated xAI -- its deeply unprofitable AI business that owns X and Grok -- into its business as its new AI division. The AI segment posted operating losses of $6.36 billion in 2025 and $2.47 billion in the first quarter of 2026, wiping out Starlink's operating profits of $4.42 billion and $1.19 billion in those respective periods. Those losses could widen over the next few years as SpaceX ramps up spending on its AI infrastructure.
NASDAQ: SPCX
Key Data Points
SpaceX's space division, which produces its Falcon rockets, only accounted for 22% of its revenue in 2025. It posted operating losses of $657 million in 2025 and $662 million in the first quarter of 2026, and those losses could also widen as it develops new rockets and spacecraft.
So when you invest in SpaceX, you're mainly investing in Starlink. On its own, Starlink is a strong business with 10.3 million subscribers and improving margins. But the losses from its AI and space divisions will erase those gains for the foreseeable future.
3. Its IPO terms are unfavorable
SpaceX is offering up to 30% of its IPO shares to retail investors instead of institutional investors. That sounds like a generous move, but it's actually offering less than 5% of its outstanding shares in its IPO. That combination of market hype, big allocations for retail investors, and a low float practically guarantees a "meme stock" pop on June 12.
While SpaceX's insiders can't start selling their IPO shares until the second full trading day after its first earnings report, its IPO investors can flip their shares for a quick profit. That reversal could burn anyone who immediately chases SpaceX's post-IPO rally.
Furthermore, Musk will retain an 82% voting stake in SpaceX after its IPO, shielding him from any interference from external investors. Therefore, its investors won't have any real power to block Musk's decisions or direct the company's future.
4. There are better space stocks to buy
Lastly, SpaceX isn't the only high-growth space stock. Rocket Lab is keeping pace with SpaceX by launching rockets for smaller payloads, while AST SpaceMobile (ASTS -5.04%) is still expanding its satellite constellation for direct-to-cellular internet services.
Both companies will benefit from the same tailwinds as SpaceX, but neither owns a money-losing AI business. So instead of chasing SpaceX's explosive market debut, I'd stick with these underappreciated stocks as my long-term plays on the nascent space services market.
Will SpaceX ever be worth buying?
SpaceX offers investors exposure to the satellite internet, space, and AI markets. That's a unique blend, but it doesn't justify its sky-high premium. I think SpaceX might eventually be worth buying, but not until the hype dies down and its valuation cools off.
