SpaceX's $75 Billion IPO Has a Problem: Too Few Shares, Too Much Hype

SpaceX's IPO Could Be Massive. The Real Risk Comes After Day One.

As Wall Street prepares for the SpaceX IPO, which could be the largest initial public offering in history, Scott Ladner is warning investors not to get carried away.

"I think you do have to probably own some because if he's (Elon Musk) right, it is massive," said Ladner, Chief Investment Officer at Horizon Investments in an interview with AInvest's Capital & Power. "But you probably dabble a little bit and you probably accumulate a position through some time. I don't know if you want to buy the entire thing on whatever sort of magic day number one is."

That caution may sound surprising given the numbers surrounding Elon Musk's space and technology empire. SpaceX is expected to raise roughly $75 billion at an IPO price of $135 per share, implying a valuation near $1.75 trillion and making it one of the most valuable companies ever to enter public markets.

The company recently disclosed financial details that showed a business substantially larger than many investors expected, fueled by its dominant launch operations, rapidly growing Starlink satellite network, and ambitious artificial intelligence initiatives.

Yet according to Ladner, the biggest challenge for investors may have less to do with the business itself and more to do with simple supply of available shares and demand.

"The supply and demand dynamics are going to be a challenge for everybody to figure out," Ladner said. While the IPO is expected to generate enormous investor interest, only a small percentage of SpaceX shares will initially be available for trading. Meanwhile, lockup expirations later this year could release a much larger wave of stock into the market.

"We're going to get a bunch of basically IPOs," Ladner said. "They're not going to be IPOs, they're just going to be POs. They're going to be offerings of stock for several weeks on end as we come through the fall into early winter."

That view aligns with recent Horizon research showing that only 3% to 5% are expected to be publicly available at launch. Despite a headline valuation approaching $2 trillion, the company's free-float-adjusted market capitalization may remain a fraction of other mega-cap technology companies. Horizon estimates Nvidia's float-adjusted market value is roughly 68 times larger than SpaceX's at launch.

Ladner believes investors should think about SpaceX as three separate businesses: space launches, satellite connectivity, and artificial intelligence.

The first two are easier to understand.

SpaceX controls an estimated 60% to 70% of the commercial launch market, according to Ladner, while Starlink has become the dominant player in satellite internet. "Their margins on that business are really quite extraordinary," he said. "We're talking like 60%, 70% margins on the space side of the business."

The AI segment is where things become more complicated.

SpaceX's investor materials identify AI as its largest long-term market opportunity, with the company planning significant investments in computing infrastructure and AI-related initiatives. Wedbush analysts noted recently that SpaceX has already spent heavily on AI infrastructure and sees a massive future addressable market tied to artificial intelligence.

But Ladner sees both opportunity and risk.

"The biggest part of the business is the part of the business that also has the lowest margins right now," he said. "That's going to be the toughest sledding."

Competition from OpenAI, Anthropic, and future entrants could make AI far less predictable than the company's established launch and connectivity businesses. Still, Ladner isn't betting against Musk. "If you think that space and AI and satellite communications are part of the future ecosystem, then this is probably a pretty attractive way to play it," he said. The challenge for investors is deciding when.

History suggests patience may pay off. Ladner noted that many technology IPOs experience steep declines during their first year of public trading, with peak-to-trough drawdowns often approaching 50%. For investors rushing to buy SpaceX on opening day, that may be the most important number of all.

SpaceX may become one of the defining technology platforms of the next decade. But according to Ladner, the path from IPO excitement to long-term returns could be much bumpier than the headlines suggest.