SpaceX IPO: IMPORTANT Details Every Trader Must Know!

In today's episode, I'm going to give you the cliff notes version of everything you need to know to get ready for the SpaceX IPO. This is especially for those that don't want to watch my hour-long deep dive into all the nuanced details of the fundamentals and the technicals of this historic initial public offering. So, we're going to go ahead and jump right on the screen share because we have a lot to cover and I'm going to try to get through it quickly. Okay, big picture, this is straight from the S1 filing, a primary source, not my opinion, just the reality, the fundamentals. Last year, SpaceX did 18.7 billion dollars in total revenue. It sounds like a lot, and it is, but it's 80% less than Nvidia did. And unlike Nvidia, they didn't operate at a profit margin. They lost 4.9 billion dollars last year. In fact, since inception, SpaceX has lost over 37 billion dollars. And that matters. This is important because big picture, you're thinking about potentially buying shares of a company that is currently losing money. This won't be the first time a company has IPO'd that's been losing money, but they're losing money at a pretty unprecedented rate. Now, SpaceX is comprised of three segments. It's three businesses within one business. It's probably more than that. The first is connectivity. That is Starlink. Starlink represented 61% of the gross revenue in 2025, giving them 11.4 billion dollars, and it produced a profit of 4.42 billion. That's significant. Connectivity and Starlink is the cash cow right now for SpaceX. Their space segment produced 4 billion dollars of revenue, but lost 657 million. And the AI segment produced 3.2 billion dollars revenue and lost $6.36 billion. That's a pretty big loss. So, it seems clear looking at these three segments of the business that connectivity is leading the company with space kind of in the middle and AI really dragging things down. Well, that was the case, but it changed. How did it change? Earlier this year, they announced a deal with Anthropic. It's a contract that's going to give SpaceX $1.25 billion per month. $1.25 billion per month for the use of their Colossus data center. This is huge. And just this past week, they announced a second contract. This one with Google for $920 million a month. So, suddenly the AI segment, which was drawing down the business last year, is now looking to pull in $27 billion over the course of the next 12 months. That's a big deal. It's suddenly gone from the biggest loser to the most profitable segment of the business. You wouldn't see that kind of swing in the connectivity space because you're not going to suddenly have an extra 20 million people that adopt Starlink in the next 6 months. You're just not going to see that type of rate of return and increase, but with AI, clearly, it's possible. So, does that all help substantiate the $1.77 trillion valuation? $18.7 billion of revenue last year. That's a 95 times price-to-sales ratio. It's historic. It's high. And so, we know when it comes to SpaceX, you're buying more than a connectivity business. You're buying more than just AI. You're buying into the belief that Elon Musk is going to do something incredible with his company. And for context, when you look at historic price to sales ratios of other IPOs, they're much more moderate. Apple was 15x, Microsoft was 8x, Amazon 27x, Netflix 4x. All right? So, having 95x is pretty insane. But, the market, if it is truly priced to perfection, is willing to pay this today. And again, as a comparison, people often compare Nvidia to SpaceX. And it's not apples to apples comparison. Nvidia is like the company that sell sold the shovels to all the gold miners. They make money on AI, but they're not an AI company specifically. They make the parts. Nvidia has a great profit margin. They did $130 billion of total revenue last year and produced 72 billion in net profit. Their market cap is $5.3 trillion. It is enormous. So, it's true that SpaceX does only about a quarter of the amount of revenue as Nvidia, and instead of making money is losing money. And so, on that premise alone, you would figure that SpaceX should probably be valued at maybe a tenth of what Nvidia is. So, maybe just 500 million. And yet, it's getting three times that at $1.77 trillion. So, SpaceX is not just a play about the current business. It's about the potential of what it could do. And by the way, everything that I'm sharing with you comes, number one, from primary sources, including the prospectus, and is not colored by the fact that I'm in the stock, cuz I don't care whether it goes up or down. I have no position in SpaceX. I will trade it on the day of the IPO, at least I plan to. But, that's just because as a trader, I crave volatility, and we're almost assured to see volatility. But, the fact is SpaceX has done the unimaginable. It really is true. They have done something that nobody else could come close to achieving in terms of launching these rockets, being able to land and reuse the rockets, and that's given their connectivity business, Starlink, a big economic moat. Because now if any other company wanted to come into the same space, they would have to use SpaceX's own rockets to launch to get their satellites into space. Now, maybe SpaceX space segment would take their money to do it knowing that they're going to have a really hard time competing with Starlink, but the fact is they have such a diversified business, it feels like right now they could do almost anything. And just think back into the 1990s with electric cars. I remember these coming to the high school and everyone laughed at them. They were on like bicycle wheels with a ton of solar panels and a couple giant car batteries. And today, 20% of all cars on the road in the US are hybrid or pure electric. So, you don't want to underestimate the innovative power of Elon Musk, but that's not to say there aren't potential headwinds because there are. Number one, the company is not yet profitable as a whole. Grok, as as part of their AI segment, is not winning the AI market. Twitter is not winning the social media market. AI segment has profitable contracts, which is true, but they have short notice cancellation clauses. And if you're interested in buying SpaceX because of Starlink, wouldn't you just be interested in buying um I don't know, Verizon or AT&T? No, because telecom companies are have a lot of regulatory risk. They have anti-monopoly rules and they're not sexy investments. SpaceX has ongoing heavy R&D and CapEx. They're going to have to continue launching satellites to maintain the Starlink system, and it is expensive. I personally have three subscriptions to Starlink and I probably spend about 750, maybe 800 dollars a month on those subscriptions, and the value of my three dishes combined is a little over $6,500. I've spent a lot of money and I've done it because it's a fantastic it's a fantastic service. It's allowed me to trade from places in the world that have no fiber and have no cable internet. So, on an island off the coast of New England, no problem. In my van in the middle of the desert, no problem. In Canada in the middle of the woods, as long as I got a clear view of the sky, no problem. And the next potential headwind, and this is a big one, is the insider lockup expirations that will have the effect of increasing the float. So, SpaceX is selling a very limited number of shares via the initial public offering. They're selling 555 million shares at $135 a share to raise 75 billion. That represents less than 5% of the total number of shares outstanding. The remaining shares are restricted by a lockout period. And so, what that essentially means is that once those lockout periods expire, you're actually going to have 7.5 billion shares that are eligible to be sold on the open market. That's drastically increasing the supply. The question is, will there be enough demand to keep the stock up in spite of all that supply? Now, a next the next structural component of this initial public offering is that we have an unusual retail allocation. Typically, day one of the IPO is the first opportunity for retail traders and investors to buy shares. But, SpaceX is reserving approximately 30% of the float for retail traders. That's over 20 billion dollars and more than 150 million shares. So, will retail demand exceed the shares reserved for the IPO? And will the average retail trader know how to request shares at the IPO price? This is a question that we don't know the answer. If, in fact, all 20 billion dollars or 150 million shares get assigned to retail, I would assume that would take the wind out of the sails because those people would no longer be buying on day one because they'll already have shares assigned them. In fact, some may even sell for a profit on day one if the price opens high enough. So, what I have done is I have reserved or requested 2,500 shares with Schwab and I did that because I want to see whether or not they grant If they grant my entire request, that tells me there's an abundance of supply. If they only give me a partial amount of those shares, that tells me that demand exceeds supply and that will indicate a higher likelihood that the stock will pop on day one of the IPO. Now, when it comes to this headwind of the early lockup release period, over the next 180 days, we've got approximately 7.5 billion shares that will be eligible to enter the float from insiders that could sell. Maybe none of them sell, but presumably some of them will sell because when the company IPOs, those insiders will have the biggest profit that they've ever had so far on this SpaceX investment. Now, Elon Musk owns an additional 5.5 billion shares. Well, some of them he has to unlock through certain performance requirements in order for them to vest. So, he's not going to be selling shares. I'm not worried about that, but there's other insiders including the people the investors that helped him buy out Twitter that got shares of SpaceX and the people that were contributing to SpaceX over the past 25 years that may very likely start to take profit. So, I fear that the IPO onto the public markets is going to create exit liquidity. And in fact, the company would have stayed private if they could have continued to get money from private equity venture capital and institutions, but they ran out of money in those spaces that they could get, and so they had to go public. That's my suspicion. It may not be true, but that's what I suspect. Because previously Elon Musk had said they would not IPO until they had landed on Mars, and that of course has not happened. The next structural element of this initial public offering is the inclusion into the NASDAQ 100. So, this is very important. On day 15 after the IPO, NASDAQ has allowed SpaceX to become part of the NASDAQ 100. And they actually changed their rules to accommodate SpaceX. And that means every fund, every ETF that tracks the NASDAQ 100 has to buy shares of SpaceX on the rebalance day. It's a one-time forced buying event. But, it's going to continue to create additional buying support as anyone buying those ETFs, by default, is getting a small slice of SpaceX. Some people disagree with this. They don't think NASDAQ should change the rules. The S&P 500 rejected SpaceX's request to be fast-tracked into the index. But, other people say that, "Look, if you want a piece If you want an index, an index is supposed to reflect the overall market. And so, SpaceX is part of the market. It should be a portion of the ETF." And so, the weighting in the NASDAQ 100 is is estimated to be between 0.47 and 0.7% of the fund. So, even if in some crazy world SpaceX went to zero, the fund wouldn't be crushed. Nonetheless, the fact that uh the S&P 500 rejected the fast-track request means that realistically uh SpaceX will have to have 1 year on the exchange plus uh 12 months or four consecutive quarters of uh profit profitability. And they're not currently profitable. So, that means they probably won't get onto the S&P 500 uh for at least another year. Now, this is my This is This is kind of where I stand when it comes to whether or not I should trade the IPO. I am bullish on it cautiously on day one. The only reason I'm a little cautious is because I don't know what the 30% allocation to retail is going to mean. Traditionally, a hyped-up IPO, I am definitely trading on day one looking for a dip just after it begins trading and then a rip higher. I'm not an investor on day one because historically, IPOs sell off within about a year. And that's because of insiders who are taking profit. In fact, if you look at Apple, Microsoft, Amazon, Netflix, Google, you look at Facebook. Facebook IPO'd at $38 a share and dropped to 17, down 54% over the course of 133 days before it recovered. It took almost a year for it to recover. So, if you want to be an investor, I think there will be far better times to be a buyer of SpaceX than on the day of the IPO. Traditionally, buying on the day of the IPO is not the right time. But as a trader, the day of the IPO presents an opportunity because there will be volatility. And on day 15, we expect additional volatility, probably to the buy side because of the inclusion in the Nasdaq 100. So, the real wild card here is the retail allocation. Will retail traders be in have such high demand that they accumulate all of the supply and still want more on day one? Or is $20 billion worth too much for retail, in which case everyone gets all the shares they want and there's very few retail buyers on day one. This we don't know. We won't know until Thursday night. So, the way it works when you request shares of an IPO is you express interest and then your broker will tell you whether or not they can give you shares and you either accept them or decline them. If they offer me my full 2,500 shares, I will decline it because that indicates that there's a lot of supply. If they give me a partial account, I'll probably accept it and take those shares. So, my 30-day outlook on SpaceX is that I think we go higher than the $135 IPO price. But after day 30, and as we get closer to the first lockout period where insiders can begin selling, I'm worried that we're going to have a headwind that the inclusion into the Nasdaq 100 isn't enough to support. However, if the companies keeps putting out strong headlines as they have with the Anthropic contract or the Google contract, the price may indeed go higher. But what we know about most IPOs is that they do sell off significantly versus the high on the IPO day, and these are just a few examples. Robinhood down 82%. Today, it's at all-time highs, but it would have been a much better uh return on your investment if you bought it down at $8 or $9 versus buying it on the day of the IPO at $36 a share. But as you see with Robinhood, it IPO'd and then squeezed up for a few days, and we may see something similar. This is the Coinbase IPO that sold off, bounced up, and then went much lower before rallying back up. Rivian IPO squeezed up for a few days and then rolled over. So, I'm a trader on the IPO. I'm not a investor on the IPO day. And something that I think is a bit upsetting is that when you look at the historical returns of IPOs, we're not going to be able a 6,000 per 6,000% uh 6,000x return the way early investors in the public market got on Amazon right here. Why not? Well, Amazon IPO'd to the market cap of $438 million. It was so much cheaper. It was a third of the current market cap. And so, you know, the fact is and and it IPO'd a lower price uh as well. But, nonetheless, the fact is the market cap was so much smaller. So, when you IPO with a 1.7 trillion-dollar market cap, in order to get a 10x return, it's going to have to go to 17 trillion. There's never been a publicly traded 17 trillion-dollar company. So, my concern is that we're not going to get good ROI on SpaceX as an investor because venture capital, private equity, and institutions already beat us to the punch, and we are just the dumb money retail traders who are going to be picking up, you know, the very the very end of this rally. I don't want to be exit liquidity, but I am interested in other space-themed stocks. This is a stock that went up over 1,000% in 3 days on a space headline. So, they put out a headline about SpaceX synergies. They used SpaceX in their PR. NASA Artemis lunar infrastructure. They used all the keywords. We got a 1,000% move in a week. This is another one that went up 3,500% in 1 week, again on a space catalyst. This is interesting stuff, and lo and behold, even just today, we had a stock that went up over 5,000% from a low of $1 a share all the way up to a high of $66 a share. Traders are in the market, and if they have an appetite to take some risk, but I don't think that SpaceX is going to be the most exciting stock to trade this week or in the weeks to come. I think there's a high likelihood that we see sympathy momentum on stocks that are piggybacking on the SpaceX theme. So, let's pay attention to those. For those of you guys that are interested in this type of content, I hope you hit the thumbs up. I hope you subscribe to the channel, and I'll remind you if you want to watch over my shoulder as I'm trading and listen to my real-time market commentary, you could check out a membership over at Warrior Trading. We have a 2-week trial that gives you a chance to get started. I will also remind you as always that trading is risky and my results aren't typical. So, the best way for you to manage your risk is to take it slow and practice in a simulator before you ever put real money on the line. With that, I'll put links to a couple other episodes you guys may enjoy and I'll see you for the next upload real soon.