7 Reasons I'm Avoiding the SpaceX IPO Like the Plague -- and You Should, Too!

The article argues SpaceX's $1.77 trillion IPO valuation is unjustified, citing 2025 revenue of $18.7 billion, a $4.9 billion net loss, and a price-to-sales ratio of about 95x. It warns that low float, accelerated index inclusion, and a shortened lockup could funnel tens of billions of dollars of forced buying to support insiders exiting later. The piece also cites weak historical performance for mega-tech IPOs, with Truist data showing a 55% average first-year drawdown across 30 large tech IPOs since 2012.

Analysis

The immediate winners are not the obvious growth proxies but the plumbing around passive ownership. If the stock is fast-tracked into benchmark products with a tiny free float, the first two weeks are likely dominated by forced buying rather than price discovery, which creates a window where market makers, prime brokers, and any holder with borrowing access can monetize dislocation. That also means the first real sell-pressure likely arrives not on day one, but around the first liquidity event tied to the lockup schedule and post-quarter reporting, when early insiders can begin testing demand.

The bigger second-order effect is on the AI-compute supply chain. Any large, loss-making capex machine that keeps pulling forward demand for power, networking, wafers, and data-center buildout can remain a marginal bid for suppliers even if the equity itself is a poor long. That makes names with real cash conversion and diversified customer exposure more attractive than the obvious “SpaceX adjacency” basket, because they can capture spend without underwriting valuation risk.

The tradeable risk is two-sided: a near-term squeeze from index and retail demand, followed by a medium-term valuation air pocket once the float widens and the market begins to anchor on the absence of profitability. The consensus is underestimating how long passive flow can support price, but overestimating how durable that support is once incremental buyers are exhausted. If the broader market weakens, this becomes a textbook liquidity trade rather than a fundamentals story, and high-beta holders will likely de-risk first.

The contrarian view is that the public market may briefly reward scarcity more than fundamentals, which can make shorting too early painful. But that does not improve the forward IRR from current levels: the embedded expectations are so high that even strong execution only reduces downside, it does not create much upside unless profitability inflects materially faster than expected. In short, the stock can trade well while the business still fails the longer-duration test.

Key Decisions for Investors

• Avoid outright shorting in the first 1-3 weeks post-debut; if forced, use small-size bearish options structures with defined risk because passive/index demand could overpower fundamentals near term.
• After the initial inclusion-driven squeeze, look to short into strength or buy put spreads on any failed breakout once the float normalizes; best window is likely 30-60 days post-IPO when lockup overhang becomes more actionable.
• Relative-value long basket: favor GOOGL and NVDA over the IPO-adjacent narrative trade, as both can monetize AI capex without taking single-name balance-sheet or valuation risk.
• Use TSLA as the cleaner hedge against Musk-factor momentum unwinding; if the IPO crowds the tape and attention shifts from execution to governance, TSLA is likely to underperform first on sentiment transfer.
• For event-driven accounts, set a calendar around the first quarterly report and lockup milestones; those are the highest-probability reversal points and offer the best risk/reward for bearish entry.