SpaceX IPO: The highly anticipated IPO of SpaceX is attracting significant investor attention as expectations of a public listing continue to build. The Elon Musk-led company is reportedly seeking to raise about USD 75 billion at a valuation of roughly USD 1.75 trillion, a figure that would place it among the world’s most valuable publicly traded companies.
SpaceX is expected to make its Nasdaq debut on June 12.
Valuation concerns for SpaceX IPO
Ahuja argued that much of SpaceX’s proposed valuation cannot be explained by its traditional businesses alone. According to him, the company’s rocket-launch operations account for only a small portion of the estimated valuation, while its satellite internet unit, Starlink, despite being profitable, would justify only a fraction of the overall market capitalisation based on conventional valuation metrics.
However, the readers should note that the company lowered its valuation target from above USD 2 trillion to USD 1.75 trillion.
He contended that a significant share of the valuation is being attributed to artificial intelligence-related businesses linked to Musk’s broader ecosystem, particularly xAI, the developer of the Grok chatbot.
Ahuja also questioned the sustainability of the valuation being assigned to the AI business, arguing that a significant portion of its projected revenue is tied to a limited number of large contracts.
He pointed to a reported agreement between Anthropic and xAI, under which Anthropic would lease computing capacity from xAI’s Colossus data centre. Citing the deal, Ahuja said it was worth about USD 15 billion annually and could be terminated by either party with 90 days’ notice.
“We are giving this vertical almost a 65- to 80-times forward revenue multiple to justify this valuation. When your entire revenue is coming from a direct competitor through a single contract,” he said, noting that Anthropic’s Claude chatbot competes with xAI’s Grok.
SpaceX IPO Listing could trigger index inclusion worries
IPOs whose market capitalisations rank among the top constituents of the Nasdaq-100 are generally eligible for inclusion after 15 days of trading. Previously, the waiting period was around three months. Additionally, the exchange has removed the minimum 10 per cent public float requirement for eligibility.
Along the same lines, the investment banker expressed concerns about the company’s expected inclusion in major US stock indices shortly after listing. According to Ahuja, such a move could force passive funds and index-tracking investors to gain exposure to the stock regardless of their views on its valuation.
He also pointed to the historical performance of large technology IPOs, arguing that many have experienced sharp declines in the months following their listings.
Against this backdrop, Ahuja said investor enthusiasm for AI-linked companies could be approaching bubble-like levels, making June 12 a potentially pivotal day for global financial markets.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)
