[amluto]

I sincerely hope the market is not willing to value this sort of deal at a P/E ratio anywhere near 94.

Off the top of my head, there is a very well established business involving buying expensive things and leasing them to the companies that intend to operate them so they can sell services: aircraft leasing.

AER is the biggest player and they have a P/E ratio of, drumroll please, 6. And I expect that GPUs, despite currently looking like an appreciating asset, will actually depreciate faster than aircraft in the long run.

[BobbyJo]

P/E is price to earning. Price to revenue is P/S. AER's P/S is like 3, so the discrepancy is much worse than you think.

Sidenote: 3 is actually high. 94 is absolutely ridiculous.

[stogot]

The question on my mind is-is this IPO designed to rip off recreational passive investors and those of us that invest in retirement accounts?

[BobbyJo]

With the Nasdaq rule changes, almost certainly.

[laughing_man]

Those rule changes aren't happening.

[a2tech]

My understanding is that the s&p 500 were the only ones unwilling to change their rules.

[l23k4]

Why "unwilling"? That's a weird wording. S&P Dow Jones Indices decided to not go through with their rule change after it became a political issue. Obviously they were willing, the proposed rule change originated from them!

[tedd4u]

FTSE 100 / Russell: changes happened. 5 days from IPO to inclusion.

NASDAQ 100: Changes happened: a) Allow inclusion in 15 days post-IPO rather than 3 months. b) Allow inclusion of companies with very small float. c) allow valuation (index proportion) to be 3x float rather than enterprise value.

S&P: no changes.

[l23k4]

They became effective last month.

[l23k4]

How would you "design" an IPO to do that? What exactly is that even supposed to mean?

[dghlsakjg]

Passive investors and retirement accounts are heavily in on automatic indexing.

This deal has been pushed hard to be included prematurely in the indexes to the point that Nasdaq changed the rules.

The accusation is that these changes were made so that index funds will buy this stock automatically far earlier than they would have previously. Given the… uh… astronomical asking price, it looks like SPCEX is meant for Elon stans and institutional index investors to be the bag holders.

[JumpCrisscross]

> retirement accounts are heavily in on automatic indexing

Majority are not. A minority are, mostly towards the S&P. Most assets remain actively managed, including in retirement assets (which covers 401(k)s, IRAs, pensions, et cetera).

[0xffff2]

Way outside of my area of expertise, but a quick search suggests that exact numbers probably depend on exactly how you define the question, but it would be broadly reasonable to say that the balance is about 50/50 +/-5%, and trending towards the passive side over time.

Would you agree with that?

[nullstyle]

You use your back channels and good ole boys club connections to try getting the rules for inclusion changed. Maybe collude would be a better verb than design? Is that your objection?

[l23k4]

Can you share any credible reporting substantiating this theory?

[nullstyle]

Common sense and rationality says that you cant motivate rules changes simultaneously across 3 independent indices without outside pressure. Can you provide some reasoning why this wouldn’t be the obvious situation?

[ralfd]

> Sidenote: 3 is actually high.

Do you mean low? AAPL has a ps of 10.

[BobbyJo]

Generally < 1 is low, between 1 and 3 is in the middle ground, and > 3 is high. However, that all depends on margins, which is why people generally use P/E or forward P/E rather than P/S to compare multiples. Issue here being that P/E is nonsensical for unprofitable companies or companies with very low margins. Spacex's P/E after Google pushed them into profitability by a slim margin would look absolutely stupid.

I would also like to point out, that on a forward P/E basis, AAPL is quite overvalued compared to historical norms, but basically every tech company is right now.

[marcosdumay]

Most companies have a P/S of 1 or 2, almost all have it bellow 4.

A few segments of the economy are known to have low revenue/investment ratios, and companies there get P/S up to 7 or so.

Then, very few companies have people betting on their growth so much that their P/S get as high as 15.

And then you have literally about half a dozen exceptions on the ones S&P tracks that get higher than that.

[burnte]

Nothing about Apple is representative of a normal business.

[rbanffy]

It’s an interesting phenomenon: being Apple is one of their key sales drivers. The brand is worth more than the business itself.

[doctorpangloss]

You're arguing with people who have no idea what they're talking about.

[BobbyJo]

Who's arguing?

[rbanffy]

Number like this might appear when a company is expected to create a revolutionary thing that upends multiple markets. I would consider a number much larger than 3 in SpaceX’s case, but 94 feels, indeed, excessive.

It’s almost like the future we were promised in the 1960’s would immediately materialise the moment launch costs drop. Starship will be revolutionary if it pans out the way we expect (as the shuttle would have been, had it kept the low cost promise), but that’s not enough to warrant that 94 number.

[amluto]

SpaceX may well revolutionize multiple markets. But I really don’t see the sub-business of building large datacenters and leasing them out, hopefully at a profit, as revolutionizing anything. Also, SpaceX has no particular competitive advantages here — the list of competitors is huge.

[HarHarVeryFunny]

Yeah, only a small portion of SpaceX's revenue actually comes from Space (payload delivery). At this point they are basically an ISP (Starlink) and a datacenter/leasing company.

It's not clear if Musk (SpaceX/X.ai) is really pursuing AI any more - I expect he hasn't necessarily given up on it, and he hasn't said he has, but it seems he's rented out almost all of his GPUs to Anthropic and Google, so that's not going to be much of a revenue generator, at least for time being.

It was in the news not too long ago that Musk was looking to use Samsung to fabricate "AI chips", presumably either for X.ai and/or Tesla, so perhaps he's basically put X.ai on hold until he can reboot his efforts with his own chips (& perhaps a new datacenter)?

[austin-cheney]

According to their IPO S-1 draft they are 93% an AI company and 4% a space company. Its the remaining 3% of the company that is profitable, the Starlink stuff.

[HarHarVeryFunny]

As I recall isn't Starlink revenue at least 3x Space revenue, so not sure how they are characterizing that 3:1 ratio as 3% vs 4% !

The "93% AI company" is also a huge mischaracterization since this isn't AI business - it's datacenter/GPU leasing business which their 2 customers can pull the plug on with 90 days notice.

[asadotzler]

Yeah, Starlink is about 3.5x the space launch revenue but still only about 0.5x in terms of profit. Falcon 9 is as optimized as a rocket could be, and absolutely owns the market. Starlink is a mostly rural service with global consumer pricing where average monthly rates in poorer countries drag the average down. Starlink government and commercial business, however, is growing quickly and I expect that soon Starlink will be ahead of launch, in terms of income, probably by the end of this year.

[adgjlsfhk1]

given that SpaceX is choosing what price they're charging starlink, there's a reasonable argument that starlink isn't profitable either

[bryanlarsen]

That's in the IPO documents. Starlink had $11.4 billion in revenue and $4.4 billion in operating profit in 2025. Falcon9 had ~$4 billion in revenue, so they didn't cheat by subsidizing starlink with Falcon9.

[bombcar]

Does Starlink pay SpaceX for launches?

[rbanffy]

For SpaceX it’s critical to maintain a steady cadence. If they don’t, they lose institutional knowledge. If the cadence drops below a point, their effectiveness at reusing rockets will also drop, defects will creep in, and they’ll have higher fleet churn.

[notahacker]

Yes. Amount is actually irrelevant, since if they underprice it SpaceX loses launch revenue, and if they overprice it Starlink looks less profitable.

The more important takeaways are that SpaceX's near-monopoly launch business is profitable but not nearly as big as Starlink, and Starlink is a good business but not one to justify a trillion dollar valuation

[outside2344]

They have to say this because we know how to value a satellite and space company (aka at 1/100th of their offering price).

[mlinhares]

Given the amount of compute rented I doubt there’s anything meaningful left for the people there to do any AI.

[rbanffy]

They can use still every spare minute that’s contracted but not actually used.

At those scales, that’s absolutely massive, and more computing capacity than most governments have.

[laughing_man]

The profit center, to the extent any division makes money, is Starlink, yes, but what we have always known as SpaceX is just a tiny side project in the combined company.

[AlexCoventry]

Maybe they'll become an AI company again after they've abused their privileged access as hardware providers to reverse-engineer Google and Anthropic's weights and operations.

[rbanffy]

That doesn’t seem beyond Elon’s capacity to rationalise.

[an0malous]

I’m pretty sure he’s just trying to become the world’s first trillionaire at this point, these deals are obviously gimmicks to boost the SpaceX share price and his less-than-critical-thinking fanbase will happily oblige.

[HarHarVeryFunny]

Yeah, then next move may be to have SpaceX buy Tesla with it's inflated stock, before it collapses.

[crystal_revenge]

> I sincerely hope the market is not willing to value this sort of deal at a P/E ratio anywhere near 94.

It will very likely be valued much, much higher. The SpaceX IPO is, in itself, a marvelous piece of financial engineering (requiring co-operation among multiple actors) which has been a long time in the works.

- Right out of the gate nearly all retail investment platforms have dramatically reduced requirements for purchasing an IPO, most notably Fidelity, which previously required $500,000 in your account to participate in an IPO reduced (on Friday) this amount to $2,000

- Retail investment, despite being quieter in the post-WSB era, is at all time highs.

- Reports are that the SpaceX IPO is already highly oversubscribed, meaning there are many more retail investors interested than there are shares available.

- SpaceX has a wildy low float of only ~4% which means price discovery will be much slower then normal, especially with aforementioned demand

- All of these retail platforms enforce some sort of "soft lock-in" whereby you're excluded from future IPOs if you sell your shares within 15-30 days. So if you want to get out you're not going to be able to participate in Anthropic/OpenAI IPOs in a few months.

- Coincidentally, most of the major indexes (thankfully excluding the S&P 500) have adjusted their rules to require only 15 days post-IPO before inclusion and have no profitability requirements. Many also adjusted the rules so that low float IPOs have their weight multiplied despite the low float.

- Many retirement accounts, in one way or another, are required to track these indexes and will be forced to buy these SpaceX shares at a very likely frenzied price and further drive the price up.

SpaceX will very likely open with far more retail demand than shares, the insiders (VCs, employees etc) will still be legally locked from selling, retail investors are penalized if they sell, and so the demand will be high and supply very low.

If they can keep this demand hyped for just 3 weeks, price will still be elevated when retirement accounts are forced to buy... roughly the same time retail investor start seeing the penalty for selling expiring (meaning it is not irrational at all to be in the IPO, but it is irrational to sell before being listed in an index).

Fun fact: the other fascinating thing about this IPO is the terms for insider lock-in. At first earnings (Jun 30) inside investors unlock and can therefor liquidate 20% of their shares... but if the stock performs well, they can unlock and additional 10%. There are additional rules for continued unlocking of more shares depending on performance as time goes on. So everyone on the inside has a very vested interest in a spike in stock prices: not only will their stocks be worth more, but they can realize that value faster.

I would be surprised if SpaceX price doesn't explode in the first few weeks because for everyone involved this would make sense. It's only in August that we'll start seeing the really interesting things start happening.

[mullingitover]

> Right out of the gate nearly all retail investment platforms have dramatically reduced requirements for purchasing an IPO, most notably Fidelity, which previously required $500,000 in your account to participate in an IPO reduced (on Friday) this amount to $2,000

Not at all surprising that the US in 2026 has degenerated to the point of turning the equity market itself into a bucket shop.

[Symbiote]

Strangely, these limitations don't seem to have been present on the European platforms. (Although I've never bought shares in an IPO myself, so I'm not certain about this.)

e.g. with https://www.nordnet.dk/kampagner/ipo/spacex for Denmark.

The minimum is 1 share (~$135), the FAQ on "when can I sell" says "Once trading begins in SpaceX, you can sell your shares at the current market price, which can be both higher and lower than the IPO price."

[mattmaroon]

I don’t think earnings have much to do with any of Elon’s projects’ market caps.

[chrisgd]

But growth rates could make that a bargain. If the market has taught us anything since 2009, it’s don’t underestimate growth

[downrightmike]

China just entered the chat, so that 94 multiple will get slashed in the year to come, hence the rush to offload onto retail

[coke12]

Comparing SpaceX to an aircraft leasing company seems more foolish to me than a 94x multiple.

I understand the gist here, but come on. This is a generational company. It’s the only relevant space launch business, and has its tentacles deep in AI infrastructure as well. Maybe the AI bet is foolish — I don’t know — you should short it!

[amluto]

I am comparing SpaceX’s datacenter-and-GPU leasing business to aircraft leasing.

It’s possible, and common, for one large company to have multiple business lines, each worthy of a very different P/E multiplier. In principle you end up with a weighted average of some sort.

edit: Matt Levine has some great articles about this phenomenon and how some companies try to juice it.

[selfsimilar]

I would short xAI but the market can remain irrational longer than I can remain solvent. Plus all the foolishness to prop it up with other businesses just seems like bad accounting.

[spwa4]

I don't think you can short it before the IPO happens. Well, unless you've got a few millions and go to a bank and have them make a product for you specifically. But for normal people, for now, not happening.

[browningstreet]

He can’t do with rockets what he says SpaceX has to do to meet its goals, and he isn’t raising enough money to get the job done either.

It’s another misdirection.

[Lplololopo]

'generational company'? Are you on drugs or so?

All of Musks business stuff highly depends on first mover advantage.

If people now selling it as a 'generational company' than it becomes even more stupid.

He didn't invent an unkown solution he is hiding to transform something into gold, he only put a lot of money into rockets.

And the rockets right now don't even have enough payload to have unlimited potential. If Space-X knows how to build a rocket very efficient, 10 years later other companies can do that too.

[ben_w]

> All of Musks business stuff highly depends on first mover advantage.

Do they? Out of all of them, I think only one of them really depends on, or even benefits from, first mover advantages: Starlink.

Tesla famously gave away all their patents, and is also being overtaken by Chinese companies with cheaper batteries because batteries are the expensive bit; SpaceX rockets are theoretically well protected because national security regulations >> patent law, but even there lots of Chinese clones popping up; TBC and Neuralink and SolarCity are going nowhere fast; Grok wasn't even the first in its field; Twitter/X is not only in heavy decline but was also always trivially cloneable and the clones are now an open source ecosystem of semi-distributed alternatives; xAI has shown ability to make data centres while pissing off locals but the market for those data centres is other AI companies who also commission their own data centres but found themselves scaling much faster than xAI did.

(Starlink's first mover advantage is "this orbit already contains a satellite").

[Lplololopo]

Tesla did not gave away its patents. It only says that if you want to use Tesla patents, we can use your patents.

Tesla won a lot of by being the first mass produced electric car.

Yeah the fact that China overtakes Tesla is a huge problem with Tesla and forces them to spread out. From all Musks hussles, only Tesla Cars and Space-X Starlink make money.

These two business are good running businesses, given. But these are not Trillion Dollar valuation companies.

Without the hype for these two things, nothing else would be possible.