Nicolas Frendo

By Nicolas Frendo • July 13th, 2026 • 4 min read

Part I of this series looked at the mechanics of a SpaceX listing and the gravitational pull a mega-IPO exerts on the rest of the market. Part II looks at what actually showed up on June 12, when SpaceX opened for trading and popped 19% on its first day. That number is not an accident. Professor Jay Ritter’s research on unprofitable, structurally hyped listings shows an average first-day pop of 26.5%, driven almost entirely by retail FOMO. SpaceX landed right inside that band. The euphoria was scripted. What comes next, the economics, is not.

Three Segments, One Ticker

Strip away the “we are colonizing Mars” narrative and SpaceX is really three businesses wearing one stock symbol. Each one tells a different story, and only one of them is actually working.

1. Starlink, the cash machine

Starlink is the real business. $11.4 billion in revenue, $4.4 billion in operating income, a 39% operating margin. Growth has been extraordinary, up 96.4% in 2024 and a still-strong 49.8% in 2025. This is a genuine, profitable, defensible connectivity business solving a real latency problem in low-Earth orbit.

2. Space, the launch business

The rocket division, Falcon, Starship, and the defense and commercial launch contracts, brought in $4.0 billion in revenue but posted a $657 million operating loss. Growth here is modest, 6-7% a year, and a large share of the capital is being poured into Starship, the super-heavy launch system that has yet to become a profit center.

3. AI (Grok), the black hole

The large language model business, folded into X and competing directly with ChatGPT, generated $3.2 billion in revenue against a $6.35 billion operating loss, a -199% operating margin. R&D spend alone was $5.06 billion, with another $1.82 billion in SG&A. This is by far the least mature and most expensive of the three segments.

Consolidated Financial Reality

Starlink’s $4.42 billion in operating profit looks impressive in isolation. It is also completely wiped out once you consolidate the other two divisions. Add the $657 million launch-services loss and the $6.35 billion AI loss, and SpaceX reports a consolidated operating loss of roughly $2.58 billion. The company that just went public at a $2.1 trillion valuation is, today, unprofitable.

Valuation Metrics

SpaceX closed its first session at $160.95 a share, putting the market cap at $2.1 trillion. On trailing sales, that is a 112.5x price-to-sales multiple. Even if you give the company the benefit of the doubt and assume 33% top-line growth to $24.84 billion, the forward P/S is still 84.5x. Neither number has any real precedent for a business that, in aggregate, is losing money.

The TAM Sleight of Hand

The prospectus leans on a $28.5 trillion total addressable market to justify the multiple. Put that number in context: U.S. GDP is roughly $31.8 trillion. SpaceX is claiming a TAM equal to about 90% of the entire U.S. economy, and close to a quarter of global economic output.

Here is the part that should give investors pause: 93% of that TAM, $26.5 trillion of the $28.5 trillion, is attributed to the AI segment. The same segment running a -199% operating margin and burning $6.3 billion a year. The division doing the worst job of making money is the one carrying almost the entire justification for the valuation.

That is not an accident of drafting. It reads like a defensive narrative trick. By anchoring the largest addressable market to the least-proven division, underwriters can frame SpaceX as an AI powerhouse first and a slow-growing industrial and launch-services utility second, which is backwards from how the actual P&L is built. It gives Wall Street ideological cover against exactly the kind of valuation critique this article is making.

“Corporate forecasts are total nonsense.” – Charlie Munger

Munger’s warning is worth sitting with here. Underwriters have every incentive to hire analysts who will build whatever forecast is needed to justify a premium valuation, because the size of their commission scales with the size of the deal. A $28.5 trillion TAM is not a forecast. It is a sales document.

The Bottom Line

Starlink is a phenomenal cash machine, and the engineering achievements behind it are historic. None of that is in dispute. But a great company becomes a horrific investment when you buy into a mountain of manufactured hype at 112.5x trailing sales. The structure of this IPO lets early backers cash out on the strength of Starlink’s real performance, while new public investors are left funding two cash-burning divisions dressed up as a $28.5 trillion opportunity.

Not financial advice. For educational purposes only.