SpaceX Soars: A $2 Trillion Launch into the Market Stratosphere

SpaceX has made a thunderous entrance into the financial markets, with shares jumping 11% on the first day of trading. This leap catapults the company into the top 10 echelon of U.S. companies, with a staggering market cap of $1.97 trillion. Quite a feat, but is the market enthusiasm justified?

Valuation vs. Reality

The shares were priced at $135 late Thursday, and by Friday, SpaceX was a titan among giants. If it were in the S&P 500, it'd command over 5% of the entire index. But here's a head-scratcher: trading at 90 times its sales, SpaceX's valuation seems detached from business fundamentals. Adam Johnson, a portfolio manager, points out that such a stratospheric valuation is hard to justify on sales alone.

Historically, most IPOs underperform the market within the first three years, according to finance expert Jay Ritter. So, is SpaceX another story of overvaluation fueled by tech hype, or can it defy the odds like its rockets defy gravity?

The AI Factor

It's not just SpaceX. Many top performers in the S&P 500 trade at a premium, pumped up by the AI boom. Isabelle Freidheim from Athena Capital likens the hype to a short-term loan against future performance. Some companies will repay that loan, but will SpaceX be one of them?

What's Next?

The real test comes when the lock-up period ends. Early investors can offload up to 20% of their shares after the next earnings report, with a full sell-off possible after 180 days. Except for Elon Musk, who has to wait a year. This could shake things up, who'll be left holding the bag if insiders hit 'sell' en masse?

Despite these uncertainties, demand for SpaceX remains high. Investors are clearly enamored with its space-faring vision, but vision alone doesn't pay the bills. Show me the inference costs. Then we'll talk future.