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$1.77 TRILLION ON VIBES

By Meghanadh Markets Opinion

SpaceX just filed with the SEC to sell 555.6 million shares at $135 each. They want to raise roughly $75 billion. The implied valuation is $1.77 trillion. That would make it the largest stock market debut in history, bigger than Saudi Aramco in 2019.

Let me say that again slowly. One point seven seven trillion dollars. For a company that lost $4.28 billion in a single quarter this year.

The valuation is not a number derived from the business. It is a number derived from the story. And the story has a lot of unproven chapters.

What the actual business looks like

Strip away the press releases and the Starship footage and the space data center pitch, and you are left with this. SpaceX has two divisions that matter. Starlink, which makes money. And everything else, which does not.

Starlink delivered $11.39 billion in revenue in 2025 with $4.42 billion in operating profit. That is a real business. Solid margins, genuine demand, a product people actually pay for every month. If this were the whole company, you could build a coherent valuation case.

The space launch division lost $662 million on $619 million in revenue in Q1 2026 alone. It spent more money than it made in the first three months of this year. The division that gets all the attention, Falcon 9, Starship, the reusable rockets that are genuinely impressive engineering achievements, is currently a loss machine.

  • Net loss of $4.28 billion in Q1 2026.
  • Net loss of $4.94 billion in all of 2025.
  • Revenue growth actually slowed, from 35% to 33%.
  • The profitable part is a satellite internet provider.
The uncomfortable truth. SpaceX the internet company is worth real money. SpaceX the rocket company is a cost center right now. The $1.77 trillion valuation is being priced on a future where the rocket company becomes something else entirely. That future has not happened yet.

The xAI problem

Earlier this year, SpaceX acquired Musk's AI lab xAI. This is the part that should make anyone looking at this carefully stop and ask some hard questions.

xAI is reportedly burning $1 billion of cash per month. SpaceX's own cash flows were somewhere between $1 and $2 billion for all of last year. That math does not work. You cannot fund a $1 billion per month operation from a business generating $1 to $2 billion per year. The IPO fundraise is not just a capital event. It is an urgent one.

Morningstar analysts called the xAI acquisition a material threat of value destruction. Their reasoning is direct. Grok has not demonstrated significant performance advantages over leading competitors. It has not gained meaningful market share. The entire founding team of xAI recently left the company. That last part is not a minor footnote. When an AI lab's founding research team walks out, that is a signal worth taking seriously.

SpaceX bought an AI lab that is burning a billion dollars a month, whose top researchers just quit, and whose product has not demonstrated it is better than what OpenAI and Anthropic are already shipping. That acquisition is now on the balance sheet of the company going public.

The space data center pitch

Here is the part I find genuinely fascinating. SpaceX's IPO filing references AI compute satellites. The vision is to put up to a million satellites into orbit to form solar-powered data centers in space. The pitch is that orbital AI infrastructure is the future of compute.

I am not saying the idea is impossible. I am saying it has never been done. There is no proof of concept. There is no working prototype. There is a filing with the SEC that describes a vision, and that vision is being priced into a $1.77 trillion valuation today.

SpaceX's own filing says it directly. Their ability to achieve orbital AI at scale depends on access to a sufficient number of AI chips, significantly more than are currently available to them. That sentence is in their own SEC filing. They are telling you themselves that the core of the pitch is unproven and chip constrained.

Read that again. The company is going public with a $1.77 trillion valuation partly on the basis of a concept that requires chips they admit they cannot currently get. That is the definition of pricing a narrative instead of a business.

What is this actually worth

Morningstar ran a discounted cash flow model. Their number came out at $780 billion. That is roughly 48% below the IPO target valuation. They said explicitly that the IPO does not offer the best entry point for retail investors.

One analyst framed it this way. SpaceX is seeking a near two trillion dollar valuation on $18.67 billion in revenue, $4.9 billion in losses, slowing growth, and an AI unit whose entire founding team recently left. Those are the inputs. The valuation is the output. The math connecting those two things is not conventional DCF. It is a series of assumptions about a future that has to go right on multiple simultaneous fronts.

  • Starship has to become reliably operational and commercially viable.
  • Chip supply has to scale enough to make orbital compute feasible.
  • AI compute demand has to keep exploding at current rates.
  • xAI has to stop bleeding cash and start gaining market share.
  • The space launch division has to flip from loss to profit.

Maybe all of that happens. Some of it probably will. But a $1.77 trillion valuation is not betting that some of it works out. It is betting that most of it works out, on a timeline that justifies the price you are paying today.

What happens right after the IPO

Morningstar still thinks the stock price holds up or even pops in the short term. The float is small, which means limited supply. Investor appetite for AI infrastructure stories is genuinely strong right now. And there is a possible fast track to Nasdaq 100 inclusion just fifteen trading days post-IPO, which would force index funds to buy it regardless of what they think of the valuation.

So the short term price action and the fundamental value are being driven by completely different forces. The IPO could pop, and that pop would tell you nothing about whether $1.77 trillion is the right number. It would just tell you that supply was tight and demand was high on day one.

This is the same pattern every speculative IPO follows. The first day price is a function of hype management and float size. The three year price is a function of whether the business actually delivered.

A stock that pops on IPO day is not telling you it is fairly valued. It is telling you the bankers managed the float well.

The honest read

SpaceX is a real company doing genuinely impressive things. Starlink works. Falcon 9 has transformed launch economics. Starship, if it ever reaches full operational status, could be a paradigm shift for what is possible in space. None of that is fake.

But the valuation being asked for right now is not being priced on any of that. It is being priced on a future that requires orbital data centers, a fixed AI lab, a Starship that works at scale, and chip supply that does not currently exist in sufficient quantities. Every one of those assumptions has to resolve in SpaceX's favor for the number to make sense.

Morningstar says wait. The fundamentals say wait. The company's own SEC filing admits the key technological bets are unproven. The xAI acquisition adds a billion dollar monthly burn to an already cash-hungry operation.

If you believe in the Musk vision of the future and you want exposure to it, you will buy this IPO regardless of what any analyst says. That is a legitimate position. Just be honest with yourself that you are buying a story, not a business at a fair price.

The actual profitable business is a satellite internet provider. Everything wrapped around it is a bet on futures that have not materialized yet. Morningstar values that future fairly at $780 billion. The IPO is asking you to pay $1.77 trillion for it today.

The gap between what SpaceX is worth and what SpaceX is asking is not a rounding error. It is nearly a trillion dollars.

Sources

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