Space X IPO: Is $135 a share a bargain or bubble? 

The much-anticipated initial public offering (IPO) of SpaceX is set to open this week, marking what could be the largest IPO in history. With a proposed price of $135 per share, the company aims to raise a staggering $75 billion, valuing it at around $1.77 trillion. While the company is widely seen as a key player for the future and an appealing choice for long-term portfolios, the main debate is whether the stock is worth its expected price.

Valuation is always subjective and heavily reliant on assumptions. At one hundred times sales, the $135 price tag looks premium. Sales drive earnings, and earnings drive stock prices over time. For example, independent research firm Morningstar pegs the fair value closer to $70 per share (implying an enterprise value of $780 billion), suggesting the IPO price leaves little margin of safety.

Given this debate, how should everyday investors approach the IPO? To answer that, let us break it down simply into three key factors I often rely on when evaluating any stock,

Valuing SpaceX

First, consider the fundamentals: margins, earnings, and profitability. SpaceX reported approximately $18.7 billion in revenue for 2025, with Starlink (its satellite internet business) as the clear profit engine. According to SpaceX’s financial data, both the launch services and AI/compute divisions continue to see significant investment and are currently operating at a loss. In 2025, SpaceX reported a net loss of $4.94 billion, while achieving gross profit of $9.22 billion. That is impressive for a company operating in a capital-intensive space tech sector. Future earnings will play a crucial role in shaping valuation metrics such as price-to-earnings, return on equity, and earnings multiples, but right now, the company shows operating losses due to heavy R&D and capex; Starlink’s scaling and new compute streams point to improving profitability. Thus, investors buying at $135 are paying a high multiple today, betting that earnings will catch up rapidly.

Starlink is already profitable and cash-flow positive, serving millions of subscribers worldwide. The rocket business benefits from reusability (Falcon 9 landings), which slashes costs dramatically compared to traditional expendable rockets. Furthermore, recent monster deals with Google (Alphabet) and Anthropic are significant changes These multi-year cloud computing agreements could add billions in high-margin revenue. Google alone reportedly commits around $920 million per month to AI compute capacity, while Anthropic’s deal pushes the combined figure near $2.2 billion per month at peak. These contracts were signed as short-term and include termination clauses, but they offer immediate cash flow and serve as a sign that the company’s infrastructure investments are gaining traction.

However, SpaceX still depends heavily on external chip suppliers, making its ability to expand margins and keeping its GPU and data centre infrastructure fully utilized uncertain if these deals do not hold. The fallback is that SpaceX’s own AI unit (tied to xAI) can utilize the assets to generate revenue.

Next, ask: Is SpaceX growing faster than its peers in the sector? This one is straightforward: yes – and by a mile. SpaceX is not just participating; it dominates. It is the only private company capable of reliably launching significant payloads to orbit, with a decade-long head start on reusability. Competitors like Blue Origin, Rocket Lab, or traditional players (ULA, ArianeGroup) trail far behind. The moat is enormous.

Starlink now delivers broadband to remote areas, governments, and militaries, with plans for even denser constellations. No other player matches this vertical integration—building rockets, satellites, and now AI infrastructure in-house. SpaceX’s lead is a classic economic moat that is difficult to price precisely but incredibly valuable.

Finally, is the sector itself expanding? Absolutely. The space economy, satellite communications, and AI infrastructure are exploding. Satellites already power much of our daily internet, phone calls, GPS, and weather forecasting. The rise of AI is supercharging demand for data centers, compute power, and low-latency connectivity. SpaceX sits at the intersection of these megatrends. Starlink addresses the connectivity gap for billions of people.

Think back to Apple’s early days. When founded, no one imagined iPhones as internet gatekeepers generating trillions. Apple had the products, ability, and execution to displace Nokia and BlackBerry. Similarly, SpaceX has multiple earnings paths: Starlink subscriptions, launches, defense contracts (Starshield), compute rentals, and futuristic plays like space-based AI or point-to-point Earth travel. While Elon Musk has promoted the idea of using space-based data centers powered by solar energy and natural radiative cooling to make AI operations more cost-effective, SpaceX’s own pre-IPO filing cautions that this project is still in its early stages and faces significant technical challenges and unproven technologies, meaning its commercial viability remains uncertain. Combine that with potential synergies (talk of a Tesla-SpaceX merger of equals) and the addressable market becomes enormous.

Pricing all this optionality is tough—some units will succeed spectacularly, others may falter. With this background, let us turn to the mechanics of the IPO and what happens next.

The IPO Rollout

Demand is red-hot. Orders have already surpassed the number of shares available, suggesting robust institutional demand and the potential for a strong debut when trading starts around June 12.

SpaceX has designed its IPO lock-up agreements so that most insiders cannot sell portions of their shares earlier than is typical, thanks to a staggered release schedule. This restricted supply, combined with buying interest, could support the price in the early months. However, the real test comes 6–18 months later when more shares unlock. At that point, fundamentals—actual earnings delivery, Starship progress, and AI execution—will matter most. Positive news on Google/Anthropic extensions or new deals could make $135 look like a bargain in hindsight, while delays or margin pressure could lead to volatility.

Key Points for Investors

For investors, here is how to approach the situation: SpaceX ticks all three boxes. It is a “buy” on quality; the debate is purely on entry price.

Approach with patient capital. This means money you will not need soon and are not borrowing to invest (avoid margin or high-interest debt).

Consider dollar-cost averaging (DCA) – buy in tranches over time to smooth out volatility.

Long-term holding (5–10+ years) aligns with the multi-decade vision of reusable space tech and AI infrastructure.

Also, diversify. Even the best companies face execution risk regulatory issues, technical setbacks, or competition.

No one can predict exact pricing, but history shows great businesses compound wealth when bought at reasonable (or even stretched) valuations with strong moats. SpaceX represents the future of humanity’s expansion into space and computing. Whether at $135 or after any post-IPO adjustment, it offers exposure to innovation that could redefine industries.

Do your own due diligence, understand the risks, and invest accordingly.