SpaceX - No Matter the Results, Don't Buy

Wait until at least 2027

Earlier this year, I stated SpaceX wasn’t a buy due to it’s crazy valuation and I highlighted five other space related companies I’d rather invest in. You can find that article here:

Today I want to touch on why I’m still avoiding SpaceX regardless of what the results are when the company reports later today. I’ll share why I’m waiting to serious consider SpaceX for my portfolio.

Don’t Buy IPOs

First off let’s just talk about why before jumping specifically in SpaceX. Savvy investors know, IPOs are very often overpriced and this seems to result in poor performance after debuting. Academic work from Jay Ritter at the University of Florida, who has tracked IPO returns for decades, found that nearly 1,500 U.S. IPOs from 2012 through 2021 trailed comparable companies by roughly 16% to 19% over the three years after listing. His data also shows the underperformance tends to widen in the months right after lockup expirations, when insider supply finally meets public demand.

SpaceX is the largest, most hyped version of this pattern ever brought to market. Insiders chose to sell at the peak of AI enthusiasm, at a price that valued the company near $1.8 trillion. The market has already walked that back by about $350 billion. History suggests the walk is not finished.

The Insider Selling Coming Thursday

On August 6, insiders and early investors become free to sell up to 20% of their restricted holdings, as much as 911.5 million shares, worth about $100 billion at current prices. That single tranche more than doubles the tradable float, and further tranches unlock on a staggered schedule through December. A second early-release trigger, which would have freed another 10% if the stock traded 30% above the IPO price, is academic with SPCX at $108 versus the $175.50 threshold.

Employees and venture holders who watched their paper wealth get marked at $1.8 trillion have every rational incentive to diversify at $1.4 trillion. For comparison stake, when Meta's first lockup freed 271 million shares in August 2012, the stock fell more than 6% that day and kept sliding for months before the business grew into its price.

The market sees this coming. Per S3 Partners, short interest has reached roughly $24.2 billion, about 32% of the float, now larger than Tesla's in dollar terms, with borrow costs quadrupling in five weeks. To be fair, crowded shorts cut both ways, and a blowout quarter could spark a violent squeeze. That is a trading setup, not an investment case.

A Stretched Valuation Without Profits

Then there’s the clear problem I have is that the valuation is insanely stretched for a business not close to turning a profit. In 2025 the company generated $18.67 billion in revenue, up 33%, but total expenses grew 57% to $21.26 billion, producing a net loss of $4.93 billion. At roughly $1.4 trillion market cap, the stock trades near 77 times trailing sales.

The segment detail makes it worse, not better. Connectivity (Starlink) is a real business: $11.4 billion of revenue, $4.4 billion of operating profit, over 10 million subscribers. But it is the only segment that makes money. Space runs at an operating loss as Starship absorbs capital. The AI segment, folded in through xAI, produced $3.17 billion of revenue against a $6.35 billion operating loss, while consuming 61% of 2025 capital expenditures and 76% in early 2026.

Then there is the quality of that AI revenue. Alphabet, which holds roughly a 5% equity stake in SpaceX, agreed to pay up to $30 billion for cloud compute over three years, about $920 million a month. Either party can terminate after December 31, 2026 with 90 days' notice. Anthropic, itself heavily backed by Alphabet, signed its own compute deal. Strip out related-party arrangements and it is fair to ask how much third-party AI demand exists at all.

For Q2, Wall Street expects about $6.9 billion in revenue and EPS anywhere from negative $1.26 to positive $0.33, a spread that tells you analysts are no doubt guessing.

Conclusion

Regardless of the results today, I’m not looking at even consider SpaceX until 2027. By many of the lockout periods will have come to pass and investors will also have three or four quarters of audited public financials instead of one S-1 and a guess.

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