SpaceX is striking while AI boom is hot, and its IPO is taking up all the space.
Wall Street digested the $2 trillion valuation that the Elon Musk-led rocket and satellite company seeks after filing its IPO prospectus last week.
The company’s ambitions span from colonizing Mars to creating a network of orbital AI data centers. It sees a total addressable market of $28.5 trillion, mostly coming from AI.
“This is a company that is investing very heavily, very heavy capex spend into AI infrastructure and into their Starship vehicle, which is going to enable all of these future businesses,” said Chad Anderson, Space Capital founder and CEO. The venture capital firm’s largest holding is SpaceX.
Nancy Tengler, CEO at Laffer Tengler Investments, which invests in Musk’s Tesla (TSLA), said her firm is interested in SpaceX as one of her funds also owns Planet Labs and Rocket Labs.
“We see it as additive,” she said. “I think ultimately SpaceX and Tesla merge.”
However, the big question is whether market euphoria over mega IPOs related to AI may be signaling a top. The S&P 500 is on its way to posting the largest earnings growth in five years, with the majority of companies surpassing earnings expectations, according to Bloomberg data. Most of that growth has come from Big Tech and AI.
Even as Wall Street analysts still see growth ahead, high oil prices have sent inflation expectations and bond yields higher, keeping investors on edge.
“We’re on the heels of this bull market that’s been driven by an industry that didn’t exist four or five years ago,” Matt Powers of Powers Advisory Group told Yahoo Finance, noting the popularity of SpaceX, OpenAI, and Anthropic in the private secondary markets
“There’s mania here, obviously,” he said, suggesting it’s best to wait to buy shares after the opening day. “I would give it a few days just to see what shakes out.”
Particularly notable is that SpaceX is reportedly considering allocating 30% of shares to retail investors, versus a typical 5%-10%.
“When you have five times the amount of IPO shares going to the retail crowd, that just tells you where the market is,” said Lee Munson, chief investment officer of Portfolio Wealth Advisors.
“It’s got that bubbly feeling. It’s go that dot-com bro energy,” he added.
Munson says investors are likely better off waiting until some of the exuberance has faded.
“I would love these companies to come out — see a big pop, and then actually buy it at a much lower valuation,” he said.