June 9 (Reuters) – SpaceX’s (SPCX.O), opens new tab landmark listing this week is set to test the “Elon premium” that has made Tesla (TSLA.O), opens new tab one of the most highly valued U.S. companies and a must-have among retail investors.
The rocket company led by Elon Musk is targeting a valuation of $1.77 trillion in its record-setting IPO, which would make it the seventh-biggest publicly traded U.S. company by market value.
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Musk’s fans contend that his track record makes buying SpaceX shares at the IPO a no-brainer, but some investors and analysts say the expensive multiple it is expected to trade at makes the risk too high.
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“Its fundamentals are really tough. If there weren’t lofty expectations, there wouldn’t be an IPO here,” said Ed O’Gorman, CEO at River Wealth Advisors, which has invested in Tesla.
The belief that Musk can create outsized value has long supported lofty valuations across his business empire.
John Plassard, head of investment strategy at Swiss-based wealth manager Cité Gestion, a Tesla shareholder, said he was comfortable paying 20%-30% more for shares in a well-run Musk company than for a comparable rival.
However, the skepticism toward SpaceX underscores that even Musk’s star power may not be enough to overcome concerns about its price tag, as some investors balk at paying prices that assume years of rapid growth and flawless execution.
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SpaceX (SPCX.O), opens new tab posted a net loss of $4.94 billion in 2025, but its targeted valuation is 94.53 times sales over the same period, according to Reuters calculations.
By comparison, Tesla trades at 16.73 times its 2025 sales, according to data compiled by LSEG.
CASE FOR DUAL EXPOSURE
“We see Tesla and SpaceX as complementary businesses. We feel confident that both of these companies can succeed,” said Tejas Dessai, director of research at Global X.
Tesla’s success in turning electric vehicles from a niche product into a mainstream industry has helped establish its credibility, making it the world’s most valuable automaker.
“If you’re betting on Elon the man, why not have both stocks in your portfolio?” said Adam Sarhan, chief executive of 50 Park Investments.
However, Sarhan said he would not buy SpaceX immediately after the debut, and would wait for a few months for the price to settle before making a decision.
One of the biggest questions facing SpaceX is its AI business, which relies on technology that has yet to be proven, such as orbital data centers.
“Space data centers that are very unproven. The physics is the biggest question mark of it all. How are you going to value something that you just simply cannot see or test or have any comparables to?” said Franco Granda, senior research analyst at PitchBook.
Grok, the chatbot developed by xAI, also trails more established rivals from OpenAI and Anthropic.
“We don’t see Grok as one of the leading AI labs today, and while we modeled a range of outcomes for this portion of the business, none of them meaningfully add to or subtract from our valuation of the AI business,” said Nicolas Owens, equity analyst at Morningstar.
Last week, Owens gave SpaceX a valuation of $780 billion, less than half of what it is targeting in the IPO.
