The SpaceX IPO... It's Worse Than You Think

Elon Musk is preparing the largest

initial public offering in human

history. At a $1.75 trillion target

valuation, SpaceX would be worth more

than every American defense contractor

combined. Worth more than the market

caps of Coca-Cola, McDonald's, Disney,

Nike, and Starbucks all put together.

And worth more than the top 10 companies

on the London Stock Exchange combined.

So, if you're wondering who the [ __ ] is

buying SpaceX, a company losing $5

billion per year at the largest IPO

valuation in history, well, the answer

is you. Because within a few weeks, your

retirement account is going to be one of

the biggest buyers of SpaceX stock,

whether you like it or not. And that's

because Nasdaq quietly introduced a

brand new rule designed specifically to

make that happen. But before we get to

the rule, you need to understand why

this all matters. Because the only way a

nearly $2 trillion valuation makes any

sense is if SpaceX is actually the

company the public believes it to be.

But it's not. If you ask 10 people on

the street what SpaceX sells, most will

say rockets. Some will say Mars stuff,

but both are wrong. SpaceX isn't just a

rocket company. It's actually three

businesses stacked on top of each other.

And the rocket business isn't even the

most important one. There's the good,

the bad, and the ugly that comes with

this company, and trust me, it gets

pretty ugly. So, let's start there. It's

the part of SpaceX that gets the most

attention and creates the least value.

XAI is mostly known for owning the

social media platform Twitter.

>> [clears throat]

>> Uh, sorry. I mean the social media

platform X. Anyways, it's also the AI

lab Elon Musk founded in 2023 to compete

with OpenAI and Anthropic. And a few

months ago, SpaceX acquired XAI in an

all-stock deal that valued the combined

entity at $1.25 trillion, with XAI

itself accounting for 250 billion of

that. If you're wondering how it's

allowed for one of Elon's companies to

acquire another one of Elon's companies,

the answer is I have no idea, but it

happened. So, with a $250 billion

valuation, you'd assume XAI is a

financially sound company, right? Or at

least close to it. Or at a minimum, that

the people who built it still work

there. Well, none of those things are

true. XAI was founded with 11

co-founders, researchers and engineers

from DeepMind, OpenAI, Google, and the

University of Toronto. It was a true

heavyweight team. But, by 2025, the

company was burning more than a billion

dollars a month. And by March of this

year, every single one of the 11

co-founders had walked out from the

company. Then Elon, on his own social

media platform, publicly admitted that

XAI had to be rebuilt from the

foundations up, which is the polite way

of saying the CEO of SpaceX just paid

$250 billion

for an asset that needs to be rebuilt

from scratch. And to say that XAI is

overvalued would still be a massive

understatement. OpenAI generates around

$24 billion in revenue annually and is

currently valued at around $850 billion.

While Anthropic generates over $30

billion annually and is valued around

$400 billion. But, XAI, who estimates a

billion dollars in revenue, was bought

for $250 billion. So, the market is

pricing XAI like it's Emirates, but in

reality, it's more like Spirit Airlines.

I like to look at XAI as the reverse

Jerome Powell piece of SpaceX. Instead

of printing cash, it burns whatever cash

the rest of the business generates. But,

it's also only one of the three

businesses inside SpaceX. The other two

businesses are the ones actually doing

the work. But, before we get to the

crown jewel, let's start with the one

that gives the company its name.

>> [music]

>> This is the part most people picture

when they hear the name SpaceX. It's the

rocket business. It launches things into

orbit, satellites for the US government,

cargo to the International Space

Station, crewed missions for NASA, and a

lot of other satellites, which we'll get

to in a minute. And the rocket business

at SpaceX generated roughly $4 billion

in revenue last year, which may sound

impressive until you compare it to the

$2 trillion valuation. Then, it suddenly

doesn't sound impressive at all,

especially when you realize the rocket

business represented only about a

quarter of SpaceX's total revenue last

year. So, this brings us to the third

business. It's the one most people don't

think about when they hear the word

SpaceX, but it's also the one that

investors care about most, and it's the

one that's paying the bills for

everything else.

>> [music]

>> This is the crown jewel of SpaceX.

Starlink is a satellite internet

provider. It's the answer to the

question, what if Comcast, but in space,

which sounds like the kind of thing a

venture capitalist tweets at 3:00 in the

morning, except in this case, Elon

actually built it. And Starlink launched

in beta in 2020, and 6 years later, it's

the fastest-scaling telecom company in

human history. There are now more than

10,000 Starlink satellites in Earth's

orbit, each one beaming internet down to

a little dish that sits on your roof.

The dish points itself at the

satellites. The satellites talk to each

other, and somehow this works. Here's

what entrepreneur and podcast host Scott

Galloway had to say about Starlink.

And then, the best product, I think, the

last few years has been Starlink.

That's amazing.

>> I just think it's absolute I've done

podcasts from planes.

I can talk to my sons on FaceTime. That

product is,

you know, all airlines are flying the

same tin can, same routes, same bad

food. A real point of differentiation

for them, and it's also in maritime.

I think Starlink is the best tech

product. So, power to him.

When they go public, is it an amazing

company, or is it overvalued? The answer

is yes. Two can be true at the same

time. Starlink has now grown to over 10

million active subscribers in roughly

150 countries. And in 2025, Starlink

alone brought in $11.4 billion dollars

revenue, which is roughly 61% of

SpaceX's total revenue for the year.

But, Starlink's ability to generate

revenue isn't even the most impressive

part. It's the efficiency underneath

that revenue which blows my mind. 2

years ago, Starlink's profit margins

were about 41%. This year, it's now 63%,

which means Starlink added over 20

points in margin expansion in just 2

years. So, yeah, the margins aren't just

good, they're also accelerating. And

Starlink isn't just for consumer

internet, either. There's a maritime

version that ships and yachts use, an

aviation version that commercial

airlines have started to roll out, and a

classified defense version called

Starshield with contracts at the

National Reconnaissance Office and the

Pentagon. So, this is the real SpaceX.

It's a satellite internet provider that

prints cash, a rocket business that's

doing pretty good, but is valued like

it's already colonized Mars, and after

the February merger, an AI lab that

lights roughly a billion dollars a month

on fire. And in 2025, Starlink and the

rocket business brought in roughly 8

billion dollars in profits, which sounds

great until you remember xAI showed up

to ruin the party. Because the

consolidated company of SpaceX, which

also now includes xAI, ended up losing

nearly 5 billion dollars last year on

roughly 18 and 1/2 billion dollars in

revenue. So, let's go back to the

question from earlier. Who the [ __ ] is

buying SpaceX at a 1.75 trillion dollar

valuation? And our answer to this

question from earlier still stands. It's

you. And this is where the real story

for the SpaceX IPO actually is. It's not

about rockets. It's not about magic

satellites in space. It's about the

financial system changing the rules

right before the biggest IPO in market

history. Because on May 1st of this

year, Nasdaq adopted something called

the fast entry rule. And with SpaceX

reportedly targeting a June date for

their initial public offering, the

timing for this new rule is extremely

convenient. But, before we get into how

we've quietly changed the rules to roll

out the red carpet for SpaceX, a quick

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And now back to that red carpet we

rolled out for SpaceX and where it

actually leads. The Nasdaq 100 is the

gold standard for technology and growth

companies. It's not only a badge of

honor for companies to be included in

it, but there's more than 200 investment

products with over $600 in assets that

track the index. Which means once you're

included in the index, it basically

forces every investment fund that

follows the index to automatically buy

your stock, which translates to billions

of dollars of investment capital. And

under the old rules, a newly listed

company had to wait at least three

months before it could be added to the

NASDAQ 100 index. That waiting period

existed for a reason. It gave the market

time to discover the actual price before

passive index funds were forced to buy

in. But the new fast entry rule cuts

that waiting period from three months to

just 15 trading days. It's three months

of price discovery compressed into three

weeks, which speeds up the process for

SpaceX to get that automatic demand

coming in. But this isn't even the

change that matters most, because there

was also two other rule changes. There

also used to be a minimum free float

requirement to join the NASDAQ 100. A

company needed at least 10% of its

shares actually available for the public

to buy and sell. SpaceX is targeting a

free float of 4 to 5%. Under the old

rules, they wouldn't qualify. Under the

new rules, that minimum is gone. And

SpaceX suddenly qualifies. And then

there's also the new hidden multiplier.

This one is the hardest to wrap my head

around. Because buried in the technical

language of the new rules is a hidden

multiplier. For companies with a free

float under 20%, NASDAQ now treats the

float as three times bigger than it

actually is. Meaning a 4% float gets

weighted as if it were 12%. A 5% float

gets weighted as if it were We've bent

the rules and rolled out the red carpet

for SpaceX. We've changed the listing

requirements so that SpaceX can join the

index with just 5% of the company

actually trading publicly. A float level

that would have been an automatic

disqualification six months ago. We've

changed the price discovery timeline so

that SpaceX skips the standard three

month seasoning and gets dropped into

the index just 15 trading days after

going public. And we've changed the

waiting rule so that ETFs are now

legally required to treat SpaceX's float

as if it were three times larger than it

actually is, meaning we've built

manufactured demand. And this is all

unfolding right now, but it's not just

SpaceX. OpenAI and Anthropic are both

reportedly eyeing their own public

listings this year, and both will almost

certainly list with the same

configuration the new rules were quietly

tailored for, meaning the Nasdaq didn't

rewrite the rules for one company. It

rewrote them for a class of companies,

and SpaceX was just the first in line.

So, Nasdaq cleared the runway for

SpaceX. The question now is who actually

gets on the plane, which brings us to

the retail allocation part of the

listing. Because while most initial

public offerings allocate 5 to 10% of

the offering to retail investors, SpaceX

is targeting 30%, and Bret Johnson, the

CFO of SpaceX, told a room full of

bankers on the record that retail is

going to be a critical part of the IPO

and bigger than any IPO in history

because, in his words, retail buyers

have been incredibly supportive of us

and of Elon for a long time, and we want

to make sure that we recognize that.

Translated out of corporate speak, the

CFO of SpaceX told a room of bankers

that the largest initial public offering

in history is going to dump 30% of its

supply on retail buyers, and not because

retail buyers help with price stability,

not because they help with long-term

shareholder alignment, because they're

loyal to Elon, and that's how this story

unfolds. The buyers and sellers of

SpaceX don't show up at the same time.

The buyers are forced in early. The

sellers are unlocked later. Shares move

from insiders sitting on a low-cost

basis to passive funds and retail, whose

retirement accounts absorb them at peak

valuation. Portfolio manager George

Noble said it best, "Your 401k is the

exit liquidity." Because if you have any

sort of retirement account holding US

stock index funds, then within a few

weeks of the SpaceX listing, you're

going to own some stock, and you won't

have a vote on it. You won't have a

choice in it. The mechanics of passive

investing will just buy it for you. So,

here's the corrected version of SpaceX.

It's a mashup of three businesses that

combined lost $5 billion last year

listing at the largest IPO valuation in

human history, and we're all going to be

buyers within a few weeks because of

manufactured demand. And there's a

reason traditional financial media isn't

covering it this way. It isn't

clickable. Because SpaceX to go public

at a nearly $2 trillion valuation is a

headline. But Nasdaq quietly rewrote its

float waiting methodology to engineer

passive fund demand for an unprofitable

company. Well, that doesn't quite roll

off the tongue as smooth. So, if you

want to actually better understand

what's happening in finance and

economics, hit subscribe. Because I can

assure you one thing, passive investing

was sold to you as the smart way to

invest, low fees, diversification, you

can set it and forget it, that it's the

triumph of common sense over Wall

Street's hot shot stock pickers. And all

of that's true, but there's also a part

of the pitch nobody mentioned, that the

same mechanism that buys the index for

you automatically also buys whatever

gets added to it without your input and

without anyone asking you. So, the

feature that makes passive investing

convenient and easy for you is the same

feature that makes you a guaranteed

buyer for anyone who can squeeze their

way into the index. And right now,

somebody just squeezed their way in.

>> [music]