We’re less than two weeks away from Wall Street’s largest-ever initial public offering (IPO). Based on several reports, Elon Musk’s SpaceX is aiming for a June 12 debut, as well as potential fast entry into the Nasdaq-100 as early as July 7.
The company that combines two of the hottest addressable opportunities, artificial intelligence (AI) and the space economy, is expected to raise up to $75 billion and slot in directly ahead of Musk’s other trillion-dollar company, Tesla, in market cap.
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But narratives are rapidly shifting ahead of SpaceX’s IPO and following the public release of its registration statement (S-1).
Report: SpaceX just slashed its valuation target by $200 billion
It was reported shortly after SpaceX confidentially filed its IPO with regulators on April 1 that Musk’s company might seek a valuation of up to $2 trillion. But according to people familiar with the SpaceX IPO, via Bloomberg News, the company is now seeking a valuation of “at least $1.8 trillion,” which is down $200 billion from its initial target.
It’s likely no coincidence that this reduction comes a little over one week after the company made its prospectus public. While SpaceX attempted to dazzle investors with a $28.5 trillion addressable market (TAM) led by AI, several aspects of the company’s operating performance left much to be desired.
For example, combined sales at SpaceX were just $18.67 billion in 2025. At a $2 trillion market cap, SpaceX would command a price-to-sales (P/S) ratio of 107! To offer some historical context, companies at the forefront of game-changing technologies have consistently been unable to sustain P/S ratios above 30.
Lowering the valuation target to $1.8 trillion still assigns an egregious P/S ratio of 96 to SpaceX stock. Its prospective valuation would need to fall by an additional $1.25 trillion just to get below the historical P/S ratio that indicates the presence of a bubble.
Perhaps even more worrisome than its valuation is SpaceX’s relatively mediocre growth from AI start-up xAI. The company behind large language model Grok and social media platform X grew sales by just 12.5% in the first quarter compared with the previous year. With Anthropic and OpenAI delivering eye-popping estimated sales growth, xAI has been stuck in the proverbial mud. xAI isn’t demonstrating that SpaceX’s $28.5 trillion TAM is attainable.
Additionally, prospective investors may be a bit gun-shy after digging into SpaceX’s bottom line. While the company has reported three consecutive years of positive adjusted EBITDA, this doesn’t mask SpaceX’s sizable net loss in 2025 of more than $4.9 billion. The capital-intensive nature of the space industry, coupled with the costs of the AI data center build-out, is likely to keep Musk’s company in the red for years to come.
Although the new fast entry rule for the Nasdaq exchange may perk up institutional and retail investor demand ahead of SpaceX’s expected June 12 IPO, the prospectus points to a valuation that’s wholly unsustainable.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
SpaceX Just Lowered Its IPO Valuation Target by $200 Billion was originally published by The Motley Fool