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Summary
The potential IPO of SpaceX would be one of the largest equity events in financial history, comfortably eclipsing the Saudi Aramco listing in 2019. With an implied valuation approaching $1.8 trillion despite current losses, it raises important questions about how markets are pricing growth, how new supply is absorbed, and what this tells us about investor sentiment. As with many such moments, the challenge is not simply assessing the company itself, but understanding expectations and positioning across the broader market.
A landmark IP – or a familiar pattern?
At a headline level, the numbers are striking. A $75bn capital raise would make SpaceX the largest IPO on record, valuing the business as the ninth largest company globally. It would also push Elon Musk’s notional wealth to unprecedented levels.
Yet large flagship listings are not new. Saudi Aramco’s IPO in 2019 held the previous record, and prior to that we saw Alibaba’s blockbuster debut in 2014. Each occurred during periods of strong market momentum and abundant liquidity. In hindsight, they were less about the individual companies and more about the prevailing environment – an alignment of optimism, capital availability, and a willingness to extrapolate growth far into the future.
We may be seeing a similar constellation today. Alongside SpaceX, Alphabet has announced an $80bn secondary issuance, while OpenAI and Anthropic are reportedly considering IPOs at substantial valuations. It is not just one company raising capita – it is a broader reopening of the equity supply pipeline.
Valuation: imagination versus arithmetic
The most immediate question is whether SpaceX represents “good value.” In traditional terms, this is difficult to answer.
Most companies are valued based on a multiple of profits. SpaceX currently has none – reporting a $5bn loss in 2025. For high‑growth businesses, investors often pivot to revenue multiples instead. On that basis, a valuation of $1.8 trillion implies roughly 90x revenues.
That is a demanding number. But as we have seen in previous cycles, high multiples are not necessarily incorrect – they are simply highly sensitive to assumptions. If growth is faster and more durable than expected, valuations can be justified. If not, they can compress rapidly.
The late 1990s provide a useful analogy. Early internet companies were often valued on metrics such as “price per click” or “price per user,” because traditional financial measures were insufficient. Some of those businesses ultimately justified their valuations – Amazon being the obvious example – while many did not.
The key point is that when valuation relies heavily on future potential, the range of outcomes widens significantly. It becomes less about precision and more about collective belief. After all, what is a mere valuation against the opportunity to colonise a planet?
Why it matters: index inclusion and forced buying
For most UK advisers and their clients, the relevance is straightforward: they are likely to own SpaceX, whether they choose to or not.
A company of this size will almost certainly be fast‑tracked into major US and global equity indices – major index providers are currently re-evaluating their criteria to try to expedite inclusion. Passive funds must then buy it. Active managers, measured against those indices, come under pressure to follow suit – unless they have strong conviction that it will underperform.
This dynamic creates a structural demand for the shares, independent of valuation. We have seen this repeatedly with large technology companies over the past decade. Index inclusion drives flows; flows support prices; and rising prices reinforce momentum.
However, this also raises a pragmatic question: if a company is already worth nearly $2 trillion at IPO, how much incremental upside remains? The larger the starting point, the harder it becomes to grow.
Who pays for it? The mechanics of capital rotation
New equity issuance does not happen in isolation. Investors must fund their purchases.
In practice, most IPO allocations go to large institutional investors, who are typically expected to remain fully invested. To buy SpaceX, they will likely sell something else. This often means trimming existing holdings – potentially large US technology names.
This rotation effect is worth monitoring. It does not necessarily imply a market downturn, but it can create relative winners and losers. New supply introduces friction into what has otherwise been a demand‑driven environment.
That said, the scale of overall market liquidity remains significant. Aggregate dividends and share buybacks in US equities still exceed total IPO issuance, suggesting that, in aggregate, markets can absorb the supply. The issue is more about distribution of capital than availability.
Market psychology: late cycle signals or ongoing momentum?
The broader question is what this says about sentiment.
Large, high‑profile IPOs often arrive late in market cycles, when confidence is high and investors are willing to embrace uncertainty. The late 1990s again provide a useful reference point, as does the surge in speculative listings in 2020–21.
The phrase “this time is different” tends to appear around such periods – and is often a sign that expectations have become stretched. These four words have been described as the most dangerous in finance and has doomed investors to repeat prior mistakes.
Yet it is equally important not to overreact. As I have noted in previous blogs, market timing is exceptionally difficult. Strong momentum can persist far longer than seems reasonable, and stepping away too early can be just as damaging as staying too long.
SpaceX’s IPO will undoubtedly capture headlines. But as with most such events, its true significance lies not in the company alone, but in what it reveals about investor expectations. When optimism is abundant, the challenge is not to avoid opportunity – but to engage with it thoughtfully and with clear eyes on the risks.
Actionable insights for advisers
- Separate company potential from market dynamics
SpaceX may well become a transformative business, but the investment case depends on the price paid and expectations embedded within it. - Be mindful of index‑driven flows
Large IPOs can distort markets through forced buying. Ensure portfolios are not overly exposed to a single narrative driven by index inclusion. - Watch for capital rotation effects
New issuance may create short‑term pressure on existing holdings, particularly large US equities. This is often technical rather than fundamental. - Avoid binary calls on market tops
High‑profile IPOs can signal late‑cycle behaviour, but they are not precise timing tools. Maintain discipline rather than attempting to predict inflection points. - Stay “responsibly long”
Momentum remains supportive, but risks are building. Diversification, valuation awareness, and robust portfolio construction remain essential.
Ian Jensen-Humphreys
Portfolio ManagerIan is a portfolio manager of the Quilter Investors Cirilium and Creation Portfolios. Ian joined Quilter Investors in March 2020 from Seven Investment Management (7IM), where he was deputy chief investment officer. Ian also spent 15 years at Goldman Sachs in risk management and portfolio hedging strategies.
Ian is a CFA charterholder and has a degree in Physics from the University of Oxford.
