SpaceX: Start of the Next Megabubble or End of the Rally?

SpaceX opened its IPO at a valuation of $1.77 trillion, with the share price moving from $1.35 to $1.77 in 35 seconds, making it the largest IPO in history. At the time of discussion the stock was trading at 94 times revenues. One analyst argued that valuation multiples do not matter for companies operating within a megatrend until they fail to deliver, citing Nvidia trading at a price-to-sales ratio of around 45 in 2023 before that ratio compressed as the semiconductor trend played out.

A counterargument held that SpaceX is trading near two trillion dollars largely because Elon Musk said it was worth two trillion dollars and markets accepted that framing. Shorting Musk is described as career risk for fund managers, and association with him structurally elevates multiples, with Tesla cited as the precedent. SpaceX is also characterized as a low-float, high fully diluted valuation asset, and retail investors increasingly focus on price rather than market cap, a dynamic that has taken scam crypto protocols to $50 billion valuations.

Index-driven buying is identified as a major near-term catalyst. MSCI, NASDAQ, and Russell index funds are estimated to be forced buyers, generating approximately 8 yards of inflows on day 5, 1 yard on day 10, and 5 yards on day 15 post-IPO. Much of the existing float is held by long-term holders such as sovereign wealth funds who are unlikely to sell, reinforcing the low-supply dynamic. HyperLiquid arbitrageurs effectively aligned the pre-IPO price with the actual IPO price, and HyperLiquid is argued to be democratizing access to assets previously unavailable to non-accredited investors.

One speaker passed on an SPV offering SpaceX shares at the IPO price of $135 because the structure charged a 30 percent fee on first-day price appreciation and had no clear share delivery mechanism, creating the risk of owing a large fee while shares arrived after the stock had already fallen. With SpaceX up approximately 25 percent from its IPO price at the time of discussion, the speaker acknowledged missing hundreds of thousands of dollars in profit. The preferred playbook is to wait for insider selling pressure to push the stock down before entering, analogous to buying Facebook at $18 to $19 post-IPO. If SpaceX traded back to $135, the speaker said they would take an 8 to 10 percent position targeting a 50 percent gain from that level.

On the day SpaceX IPO'd, every other publicly traded space company including Rocket Lab and Virgin Galactic was down approximately 30 percent. The selloff was attributed to retail investors who had used those stocks as SpaceX proxies, with Virgin Galactic having doubled in price leading up to the IPO. The rotation was described as a classic liquidity suck analogous to crypto rotation trades. The long-term bull case rests on Starlink's potential to surpass Verizon, AT&T, and Comcast, SpaceX's demonstrated military value through Starlink in Ukraine, and the argument that SpaceX is likely the only company capable of asteroid mining within the next 20 years. Goldman Sachs pulled approximately 100 million dollars in fees from the deal and issued projections about Musk building cities on Mars to justify recommending the stock at the 1.75 trillion dollar valuation.

A significant forward risk is that the OpenAI and Anthropic IPOs will be bearish for the broader market. Because both companies are unprofitable they will not be included in NASDAQ indexes, meaning capital will flow into those IPOs without index rebalancing offsetting the drain. Simultaneously, SpaceX early investors and insiders who have waited roughly 20 years for liquidity will face unlock periods coinciding with those IPOs, creating a large volume of simultaneous selling pressure.

On adjacent trades, Intel is described as structurally more attractive than SpaceX at current levels, with Google's deal to purchase 3 million TPU units from Intel by 2028 cited as evidence that Intel chips have become competitive for the first time in the company's history, with a potential path to a one trillion dollar market cap. Uranium is being reaccumulated after a selloff. On Robinhood versus HyperLiquid, Robinhood is favored over the next 6 to 12 months given its larger and more diversified income stream, Trump account lock-in advantages, and a price target implying a potential 10-bagger. HyperLiquid has higher margins but a narrower business, and a shift toward it would require a CFTC deal and a competitive mobile app.