A weekly look at Wall Street’s headline-grabbing deals.
The deal that would swallow the market
This episode of What’s the Big Deal digs into the SpaceX IPO from every angle: the state of the market it’s entering, the mechanics of how an IPO actually gets priced, the valuation case (and its gaping holes), and the question the show always asks — who really wins?
SpaceX is reportedly planning to go public as early as June, targeting a valuation of somewhere between $1.5 and $1.75 trillion. That number is so large it barely registers — until you put it in context. The entire U.S. IPO market raised roughly $170 billion in 2025, across more than 1,300 deals. SpaceX is said to be looking to raise around $50 billion in that single listing. Then factor in that Anthropic and OpenAI are also rumored to be planning IPOs this year, each potentially of comparable scale. Three deals. The entire annual proceeds of the IPO market. That’s not a pipeline — it’s a flood.
Why companies are staying private longer — and what that means for you
Before getting to SpaceX specifically, it helps to understand a structural shift in how companies come to market. In 2005, the median company was about seven years old when it listed. By 2025, that figure had risen to nearly eleven years. Companies are staying private for longer, and the reason is simple: there’s an enormous amount of private capital available to fund them. Private equity dry powder alone exceeds a trillion dollars, and when you add private credit and bank lending capacity, growth-stage companies can sustain themselves in the private markets far longer than they could two decades ago.
The consequence for public market investors is significant. More of the value creation now happens before the IPO. The early investors and employees capture the biggest gains during the private phase; by the time shares are available on an exchange, a lot of the upside has already been realized. This is the lens through which to evaluate SpaceX — a company that was valued at $12 billion as recently as 2015 and is now being asked to list at more than a hundred times that.
How IPO valuation actually works
Valuing a company for an IPO is harder than valuing an established public business, for a few reasons. First, comparable companies take on unusual importance: since the goal is to understand how the market will price this type of business, analysts lean heavily on what similar public companies trade at — and for novel businesses, finding genuine comparables is genuinely difficult. Second, the multiples used are different from those applied in typical M&A analysis. IPO-stage companies are often not yet at full scale, so earnings-based multiples are less useful. The focus shifts to revenue multiples — enterprise value divided by revenue — which can get very large for high-growth businesses. Facebook listed at around 25 times revenue in 2012. Cloudflare, more recently, listed at around 30 times. Both reflected expectations of rapid post-IPO growth.
Sum-of-the-parts valuation is central to analyzing complex businesses like SpaceX — here’s how the methodology works in practice.
Third, for companies without obvious direct comparables, analysts often rely on sum-of-the-parts valuation (SOTP). Rather than valuing the whole company at once, SOTP breaks it into its business segments, values each independently using the most appropriate benchmark for that segment, and then aggregates them. For SpaceX, this means treating Starlink’s consumer satellite business, the government launch services division, the direct-to-cell offering, and the recently merged xAI operation each as distinct entities with their own comps and multiples. The overall company value is the sum of those parts.
Fourth, knowing the capital structure post-IPO matters enormously — how much debt and cash the company will carry after listing determines what the equity is actually worth. And finally, the pricing itself involves a deliberate discount to what the company is expected to trade at in the open market. That discount compensates IPO investors for taking on price discovery risk: they don’t know exactly where the stock will settle once it starts trading. It’s the incentive that gets institutional investors to commit capital before the shares are publicly available.
A complete walkthrough of how IPOs work — from the mechanics of pricing and book-building to what the S-1 filing actually tells you as an investor.
SpaceX’s valuation: the numbers are extraordinary
Here’s where things get uncomfortable. SpaceX was marked at $800 billion at the end of 2025 — in a private transaction, by sophisticated investors, just months ago. The IPO is asking public market participants to subscribe at more than double that. Then, in early 2026, xAI was merged into SpaceX, and Musk guided the market to a combined valuation of $1.25 trillion — attributing $250 billion of that to xAI’s contribution.
Using a sum-of-the-parts model, you can roughly back into what’s implied. Starlink’s consumer business might be valued at 30 times revenue. Launch services at perhaps 5 times. The direct-to-cell segment at around 35 times. Those are already aggressive numbers. But the xAI business had revenues of roughly $500 million in 2025 — and at a $250 billion valuation, it’s being priced at 500 times trailing revenue. For reference, Cloudflare, one of the most successful high-growth listings in recent memory, traded at about 30 times trailing revenue at IPO. xAI is being valued at more than sixteen times that multiple.
Taking the full $1.75 trillion IPO target and SpaceX’s projected 2026 revenue of around $28.5 billion for the combined entity, you arrive at a forward revenue multiple of roughly 61 times. On a trailing basis, the multiple is closer to 100 times. To justify a valuation at that level, you’d need the company to sustain roughly 40% annualized revenue growth for a decade. No company of SpaceX’s current scale has ever done that. And that’s the starting point for the IPO — not a crazy bull case, just the baseline required to make the numbers work.
A primer on EV/Revenue multiples — what they measure, when to use them, and what high multiples actually imply about expected growth.
The IPO process: from S-1 to the green shoe
For a deal of this scale, the process is worth understanding. A typical IPO takes around twelve months from initial planning to listing. It involves appointing a syndicate of banks — in SpaceX’s case, multiple major institutions — who collectively earn fees of around 5% of the deal proceeds. On a $50 billion raise, that’s $2.5 billion in banking fees.
The banks conduct due diligence, help draft the prospectus, and file an S-1 with the SEC. The S-1 is the first time a private company’s financials become publicly available — and for anyone considering investing in the SpaceX IPO, it will be essential reading. Once the S-1 is filed, the company and its bankers embark on a roadshow: a series of investor presentations that are effectively a live pitch for the business. Institutional investors ask questions, probe the financials, and decide how much they’d be willing to pay and at what price — a process called book-building, which ultimately informs the final IPO price.
SpaceX is targeting a listing on the Nasdaq, and has reportedly been pushing for fast-track inclusion in the Nasdaq 100 — within just 15 days of listing, compared to the standard waiting period of up to a year. The logic is straightforward: Nasdaq 100 inclusion forces passive index funds to hold the stock, providing an automatic boost to demand post-IPO. The Nasdaq is apparently open to adjusting its rules. That, as the hosts note, has Elon written all over it.
Once a company lists, the banks aren’t finished. They have a responsibility to stabilize the share price in the immediate aftermath of the IPO, and they do this through a mechanism that’s one of the rare permitted forms of market intervention. During the offering, banks sell slightly more shares than they’ve been allocated — effectively taking a short position. If the price falls, they can buy those shares back in the open market, creating buying pressure that supports the stock. If the price rises, they use what’s called a green shoe option: a provision that allows them to go back to the company and request up to an additional 15% of shares to cover the short. The name, incidentally, traces back to the Green Shoe Manufacturing Company, the first issuer to include such a provision in its IPO documents.
What an S-1 filing actually contains, how to read it, and why it’s the most important document for any prospective IPO investor.
Why SpaceX is doing this now
The rationale for a SpaceX IPO comes down to a few converging needs. Most immediately, cash: the xAI business that was folded into SpaceX is burning through roughly $1 billion per month, and there are reportedly ambitious plans to build a space-based data center that will require very deep pockets. Raising $50 billion from public markets would fund that runway. Alongside the capital need, there’s a more structural motivation: SpaceX’s early investors have been sitting on enormous paper gains for years, and they want to crystallize some of that value. An IPO gives them an exit — though not all at once. Bankers typically advise limiting existing shareholder participation to around 10-15% of the deal at IPO, to avoid the optics of everyone heading for the door simultaneously. Remaining holders are usually subject to lockup periods ranging from six to eighteen months, with staggered release schedules. The overhang from those future share sales is something public market investors will need to price in.
Who actually wins?
The honest answer, for most scenarios, is not the public market IPO investor.
If the deal closes anywhere near the touted valuation, the biggest winner is Elon Musk himself. He’s the largest single shareholder, and a $1.5 to $1.75 trillion valuation would make him, by most estimates, the world’s first trillionaire — a benchmark that, the hosts note, may itself be part of the motivation. Early investors and employees who’ve held equity through the private phase stand to realize enormous gains on their paper wealth, as the IPO provides both liquidity and a market-based mark for their stakes.
For someone buying shares in the IPO, the picture is much harder to paint optimistically. The multiple is already sky-high, the growth assumptions required to justify it are unprecedented, and the market for new listings is about to be flooded with competing mega-deals from Anthropic and OpenAI — all competing for the same pool of institutional capital in effectively the same technology and AI category. To make money on this IPO, you don’t just have to believe in SpaceX’s existing businesses. You have to believe in something that isn’t in any of the current numbers: a space-based data center, or colonizing Mars, or some other development that isn’t yet visible in the financials. That’s not an investment thesis built on analysis — it’s a bet on a vision.
The Tesla IPO was cited as a precedent for Musk defying the skeptics. It listed during the shadow of the financial crisis, when auto companies were unloved, pivoted its narrative to position itself as a tech company, and delivered extraordinary returns. But Tesla listed at a market cap of about $2 billion. SpaceX is asking investors to participate at a valuation a thousand times larger, with an equivalent growth rate priced in. Elon Musk has earned credibility as a founder. The numbers haven’t.
