Before You Buy the SpaceX IPO, Watch This

The SpaceX IPO may be one of the most anticipated public offerings in history, but investors should not confuse an innovative company with a risk-free investment. In this video, Troy Sharpe explains that the better question is not simply, “Should I buy SpaceX stock?” but rather, “What price am I paying, what risks am I accepting, and how does this fit into my retirement plan?”

Troy walks through eight key things investors should understand before making a decision about the SpaceX IPO, including its potential valuation, the history of major IPOs, insider selling, lockup periods, Starlink’s role in SpaceX’s revenue, future growth expectations, Elon Musk key-person risk, and the limited voting power public shareholders may have.

For retirees and those approaching retirement, the biggest takeaway is that position sizing and risk management matter. A stock can be exciting and still be inappropriate if it creates too much concentration, volatility, or uncertainty inside a retirement income plan.

Watch the video below and read the full transcript to learn what investors should consider before buying into the SpaceX IPO.

About Troy Sharpe CFP®, CPWA®, CTS®: 

Troy Sharpe CFP®, CPWA®, CTS®, is the founder and CEO of Oak Harvest Financial Group. In this video, he discusses the SpaceX IPO from the perspective of retirement planning, portfolio risk, income strategy, and long-term financial decision-making. 

Who this video is for:

This video is for investors considering the SpaceX IPO, especially retirees and pre-retirees who want to understand how a high-profile IPO could affect their retirement income plan, tax strategy, portfolio risk, and long-term financial security. 

Quick Answer: Should You Buy the SpaceX IPO?

The SpaceX IPO may be exciting, but investors should be cautious before buying simply because of the hype. In this video, Troy Sharpe  explains that the real question is not whether SpaceX is an innovative company, but whether the IPO price, valuation, risks, insider selling structure, and lack of shareholder voting power make sense inside your retirement plan. For retirees and those approaching retirement, position sizing, income needs, tax planning, and risk management should come before any decision to buy a high-profile IPO.

Key Takeaways From This Video

• SpaceX may be one of the most innovative companies in the world, but that does not automatically make the IPO a good investment at any price.
• Troy highlights eight major risks to consider before buying the SpaceX IPO: valuation, IPO volatility, early investor liquidity, lockup periods, Starlink revenue dependence, future growth assumptions, Elon Musk key-person risk, and limited public shareholder voting power.
• The IPO price matters because investors may be paying for many years of future success before the company has proven it can generate consistent profits and free cash flow.
• Retirees and pre-retirees should be especially careful with IPOs because large losses or excessive concentration can affect retirement income, taxes, confidence, and long-term financial flexibility.
• The biggest lesson is that most investing mistakes happen not because someone bought a risky investment, but because they bought too much of a risky investment.

Transcript

Is the SpaceX IPO Worth the Risk?

This is about to be the biggest stock market debut the world has ever seen. And the company behind it may be one of the most impressive ever built. Reusable rockets, satellite internet, artificial intelligence. So here’s the question almost nobody is asking. What if one of the most innovative companies of our lifetime is also extremely risky to buy at this price? Because those two are completely different questions. And today I’m going to help you tell them apart. Of course, we’re talking about the SpaceX IPO, and as of last week,

This is no longer a rumor. SpaceX has filed with the SEC, they set a fixed price, and they’re scheduled to go public very soon. So let me say this clearly. I’m not here to tell you to buy it. I’m not here to tell you to avoid it. I am here to help you think through it. When a major private company finally goes public, the question isn’t just, do I believe in the company? The better questions are what price am I paying and what am I receiving? Who is it that’s exactly selling to me? Why are they selling to me? What risks am I accepting?

And how does this fit into my overall retirement plan? That last one matters most because if you’re retired or approaching retirement, your portfolio has a job to do. It has to support income and manage risk. It has to work with your tax strategy, and it has to preserve flexibility because without flexibility, you can get boxed in. And most importantly, you have to make sure the headline of the week doesn’t drive your retirement for the next 20 years. So let’s walk through eight things that I would want you to understand before making any decision around the SpaceX IPO.

Number One: The Valuation Is Extremely High

Number one, the valuation is extremely high. Here are the numbers straight from the company’s SEC filing. They’ve set a fixed price of $135 a share. They plan to sell about $555 million shares. That’s going to raise about $75 billion. And it’s going to value the company at about $1.77 trillion. If it prices near those numbers, this will be the largest IPO in history. That’s absolutely remarkable. But here’s the fact that everyone needs to sit with. At around $1.77 trillion,

SpaceX will be valued at about 67 times sales. For perspective, that’s about three times the valuation multiple of NVIDIA when looking at sales. NVIDIA trades around 20 times their trailing 12-month sales. SpaceX is going to trade at 67 times sales. It’s almost three times. You’re being asked to pay for many years of future success. Now, growth companies are often valued on what they could become, not only what they are today, but the higher the price, the more the future has to cooperate.

And not everyone is convinced that this price makes sense. Morningstar has recently called the IPO significantly overvalued. Their estimate of fair value came in at roughly half of what the IPO assumes. So two of the most important questions right now are at this price, how much has to go right? And at this price, how much could go wrong?

Number Two: The History of Big IPOs Is Humbling

Number two, the history of big IPOs is humbling. A big IPO can feel like a sure thing because everyone is talking about it, the hype is real, and everywhere you turn, that’s all you hear.

But history gives us a useful reminder. High profile IPOs can still be volatile. And here’s something most people never learn. The IPO price you see in the headlines is not the price you’re likely to get. That price goes to the big institutions and insiders the night before the stock starts trading. By the time you can buy it on your phone the next morning, the price is often already higher. So the regular investor often starts the race a step behind. Sometimes that gap is small.

Like when Facebook went public in 2012, it opened right around its $38 offer price. Regular investors got in at about the same level as the big institutions. From there, it fell more than 50% within a few months. Uber was similar in 2019. It opened right around its $45 offer price, and within its first year, it had dropped about 65%. But sometimes that gap is enormous. The offer price and what you’re able to purchase it at isn’t always the same.

Priced its IPO at $78 in 2021. But that was the price for big institutions. By the time it opened the next morning for everyone else, it was nearly $107. From that opening price, $107, it fell more than 80% within that following year. Alibaba priced at $68 in 2014, but it opened to the public at about $93. And then from that point, if you bought it at $93, where it opened in the morning, it fell nearly 40% within his first year.

Now, to be fair, that’s only one side of the story. Some IPOs do rise from day one. And in this case, there is a real possibility of early upward pressure for SpaceX. See, they’re only floating a small slice of the company. And there’s reporting that it could be added to a major stock index within just a few weeks of listing. A small supply of shares plus buying from index funds can push a price higher, at least for a little while. So while SpaceX is offering at 135 per share.

Pay attention to what price it actually opens at on its first day of trading. Especially be aware of this if you’re considering putting a market order to buy at the open, just so you can say that you were one of the first ones in. That is often how regular investors end up paying the highest price of the day. So the point is not that the stock will fall. The point is that day one excitement does not eliminate risk in either directions. Sometimes the excitement is exactly why the starting price is so high. Think about it. The investment banks, they have to pump the stock. They want it to sell high.

The insiders who own it privately, they want it to sell high. Everyone is pumping the stock. Just simply don’t confuse an exciting stock that’s going to IPO with a secure investment from day one.

Number Three: Early Investors Are Finally Getting Liquidity

Number three, early investors are finally getting liquidity. Here’s the question I would ask about almost any IPO. Who’s selling, who’s buying, and why now? For years, SpaceX was private. That means early investors, employees, institutions, and insiders had access long before you did.

An IPO can give some of those people a way to sell shares, pay taxes, diversify, or turn years of those paper gains into actual cash. There’s nothing wrong with that. They took the risk early, they have earned the chance to take money off the table. But if you are a new public investor, you need to understand that the other side of the transaction is selling for a reason. When you are buying, someone is always selling. And that seller may have owned shares at a much lower valuation for years. So the question isn’t just can I finally buy SpaceX? The better question is.

Am I buying an opportunity or am I providing liquidity to someone else at the highest valuation this company has ever had? And the answer could be both. That’s why the structure matters.

Number Four: The Lockup Calendar Could Really Matter

Number four, the lockup calendar could really matter when it comes to the SpaceX IPO. So most investors know the IPO price. Far fewer pay attention to the lockup period. In a typical IPO, insiders are restricted from selling for a set period after the company goes public, often around 180 days.

That doesn’t eliminate volatility, but it can slow how much insider stock hits the market all at the same time. What makes SpaceX so unique is that there’s reporting that says there may be a more staggered lockup structure. That means some insider shares may become eligible for sale in waves instead of one clean date six months later. And remember, only a small portion of the company is being sold at the IPO. So the supply of shares could change meaningfully over time. So the point is simple: know the calendar.

When can insider sell, how much stock could become available, and when that supply hits the market, what is the potential that that excess supply does to the price of the stock? Stock prices aren’t only about fundamentals like profits, cash flow, they’re also about supply and demand. And if you buy it early, it helps to know whether more supply may be coming right behind you.

Number Five: The Revenue Story Leans Heavily on Starlink

Number five, the revenue story leans heavily on Starlink. So most people think of SpaceX as a rocket company, and that’s understandable, it has space in the name.

The rockets are what made the company famous. But from an investor’s perspective, the current revenue story leans heavily on Starlink. So Starlink, for those of you who may not know, is a satellite internet business. It’s very profitable, it’s grown quickly, and recent reporting indicates that SpaceX currently makes most of its money from Starlink. So that creates an important question. How much of the investment case depends on one business line continuing to grow? Starlink is a strong business, but here’s what you still need to ask.

What happens if subscriber growth slows? What happens if pricing pressure increases? What happens if competition becomes more aggressive or governments and regulators become more restrictive? Competition is already developing. A company called OneWeb is running its own network of satellites, serving businesses and governments mostly. And Amazon, the same Amazon that you pick up your phone, order packages that show up to your doorstep the same day, they’re building a direct competitor to Starlink.

Amazon has started launching its own satellites with service expected to begin rolling out this year. Starlink will no longer have this market to itself. So when you look at SpaceX, don’t only think about rockets. Understand how much of the current financial story may continue to depend on Starlink continuing to execute.

Number Six: Future Bets Are Still Future Bets

Number six, future bets are still future bets. They’re not guaranteed outcomes. So SpaceX isn’t being valued just for what it is today. It’s being valued on what investors potentially believe it could do.

Over the next five to ten years. That includes Starship, the next gen Starlink, AI, orbital data centers, space-based computing, the moon, sending people to Mars and colonizing, and probably ideas that we’re not even thinking about yet, but Elon is drumming up. So that that’s exactly what makes this company so exciting. That’s why we have so much hype, and that’s why this is one of the most innovative companies ever. There’s even talk that SpaceX could one day merge with Tesla. And Tesla’s primary focus right now isn’t necessarily cars.

It’s autonomous driving cars, robo taxis, and humanoid robots. So there’s a lot of potential here. There’s a lot that could go right, but also there’s a lot that could go wrong. So understand the word we’re talking about here is is potential and it’s a lot of talk. And that’s exactly the point of this section. A lot of what’s fueling the excitement hasn’t actually happened yet. But excitement is not the same thing as cash flow. And here’s a fact that actually matters. SpaceX is not currently profitable.

Based on its own filing, the company reported a net loss of more than $4 billion in its most recent quarter, on top of the billions in losses over the prior year. And remember point one, and that’s that the valuation is extremely high. So they’re going to offer at 67 times sales. And remember, that’s three times NVIDIA’s sales multiple. So the company, SpaceX, is not even at breakeven. They’re losing billions of dollars. So a large opportunity.

Is not the same thing as revenue. Revenue is not the same thing as profit, and profit is not the same thing as free cash flow. Those steps matter. The bigger the ambition, the more capital it may take. Rockets are expensive, satellites are expensive, AI infrastructure is expensive, space infrastructure is tremendously expensive. And if the valuation is already counting on several of those ideas working and being profitable in the near term, investors need to respect how much execution is actually required. None of it’s guaranteed.

And what could possibly go wrong?

Number Seven: The Company Leads Heavily on One Person

Number seven, the company leads heavily on one person. It’s hard to separate SpaceX from Elon. For many, that’s part of the appeal. He has ambitious companies, he has attracted tremendous talent, he’s raised enormous amounts of capital, he’s pushed entire industries to move faster. But key person risk cuts both ways. If one person is central to a company’s strategy, their technology, capital raising, the public image, investor confidence, then that person’s time, focus, their health, their reputation.

And every decision they make, it all matters. And Elon’s attention is spread across several large ventures. Yes, Tesla, SpaceX, the AI businesses, many other projects. In fact, these companies are increasingly intertwined with overlapping ownership and transactions between them. No matter how talented someone is, they’re still only 24 hours in a day. So the question isn’t do you believe in Elon Musk? The better question is, would this investment still make sense if he stepped back, shifted focus, or became less involved?

That’s just basic risk management.

Number Eight: Public Investors May Have Very Little Voting Power

Number eight, public investors may have very little voting power. This is one of the easiest things for you to overlook. So according to the company’s filing, Elon Musk will retain more than 82% of the voting power after the IPO. That means public investors may be able to participate economically, but they may have very little practical influence over the company’s major decisions. So in plain English, you may own a piece of the company, but you may not have much say in how the company is steered.

This kind of structure is not unusual for founder-led companies. Meta and Alphabet use structures that give founders or insiders significant control as well. Sometimes that helps leadership think long-term. Sometimes it limits shareholder influence. The trade-off is simple. You may get exposure to the upside, but you may have limited say over board elections, executive compensation, acquisitions, capital raises, or major strategic decisions. So before buying, ask yourself: are you comfortable owning the economics?

Without having any say-so over big decisions at the company. Think about it. The reason voting shares exist is so there can be a check and balance between in insiders or executives authorizing huge pay packages, major transactions that shape the future of the company. While your vote by itself may not be important, the ability to collectively get together to act as a check can be a positive force for some companies. Elon says he wants complete control.

And just go into it knowing that that’s the situation that you’re you’re you’re settling for or you’re choosing to to invest.

What This Means for Retirees and Pre-Retirees

Okay, now let’s bring this together. SpaceX may be an extraordinary company. It may become one of the most important public companies in the world. It may continue to change industries and may continue to prove skeptics wrong. But investing isn’t just about finding impressive companies. It’s about what you pay. It’s about how much risk you’re willing to take. It’s about whether that investment fits your timeline and whether it fits your plan.

This is the part that retirees and people approaching retirement cannot afford to miss. A young investor with a long time horizon may be able to take more concentrated risk. A retiree drawing income from a portfolio has to think very differently. Because if a stock falls 30, 40, or 50% after you buy it, that’s just not a number on the screen. That can affect your income, your taxes, your confidence. It can affect the decisions you make in the middle of a volatile period. So here’s the most important idea in this entire video. Most investing mistakes.

Do not happen because someone bought a risky investment. They happen because someone bought too much of a risky investment. Position sizing is everything. So the real question was never, is SpaceX exciting? Of course it is. It’s extremely exciting. The real question is, should you buy it at the IPO or should you wait to see what happens? Is this core money that you’re going to need for your retirement? If you buy it early and something happens, will that materially impact your ability to generate income in retirement? How much of it do you buy?

Don’t be too concentrated in any one stock. That’s just a general risk management principle again. So I want to make sure that you understand all eight things that we discussed in this video because they’re meant to help you think through not only should you buy it, but when should you buy it and how will it impact your overall portfolio, your overall retirement if things go well and if things don’t go well? Those are better questions. And they’re exactly the questions a real plan is built to answer. At Oak Harvest, we don’t look at any investment in isolation.

We look at how it connects to your income strategy, your tax plan, your healthcare needs, your estate plan, your long-term goals. That’s the difference between simply owning an investment and actually having a retirement strategy. So if SpaceX or any IPO for that matter has caught your attention, don’t start with should you buy it. Start with how will it fit into your retirement plan? If you’d like help answering that question for your own situation, you can always reach out to our team. We’ll look at it together, have a conversation, and answer your questions. If you like this video, make sure to share it because I’m sure you have a lot of friends that are considering the SpaceX IPO that’s up and coming really soon here. And again, we’re here to help. If you have any questions, reach out to us and we look forward to seeing you soon.

[End of transcript]

SpaceX IPO FAQ

Is the SpaceX IPO a good investment?

The SpaceX IPO may be attractive to some investors because of the company’s innovation, Starlink growth, reusable rocket technology, and long-term ambitions. However, Troy explains that investors should not evaluate the IPO based on excitement alone. The price, valuation, risks, time horizon, and role inside a retirement plan all matter.

Why could the SpaceX IPO be risky?

The SpaceX IPO could be risky because of its high valuation, potential first-day volatility, insider selling, future lockup expirations, reliance on Starlink revenue, lack of current profitability, key-person risk tied to Elon Musk, and limited voting power for public shareholders.

What should retirees consider before buying the SpaceX IPO?

Retirees should consider whether a volatile IPO fits their income strategy, tax plan, risk tolerance, and long-term retirement goals. A large loss in a concentrated position could affect income, confidence, and flexibility during retirement.

Why does position sizing matter with IPO investing?

Position sizing matters because even a promising company can create problems if an investor buys too much of it. Troy explains that many investing mistakes happen because someone bought too much of a risky investment, not simply because they bought a risky investment.

What is the biggest question investors should ask before buying SpaceX stock?

The biggest question is not simply, “Should I buy SpaceX stock?” The better question is, “How does this investment fit into my overall retirement plan?”