Exploring New Frontiers

Jeffrey Liguori

Momentum behind all things outer space is building rapidly. The aerospace field is advancing quickly toward ambitious goals beyond mere exploration, such as in-space manufacturing, lunar data centers, space-based solar power, lunar mining for rare earths and metals, and space tourism. Space is nearly a $700 billion industry today and likely to surpass $1 trillion in about five years, and $2 trillion by 2040.

For years, exploring and working outside of the Earth’s atmosphere has been almost entirely driven by the governments of sovereign nations, largely dominated by the U.S. and Russia, with China emerging as a powerful competitor in more recent years. Private contractors dabbled in space travel as early as 1982, but with intermittent success, constrained by the enormous amounts of capital required to support an ongoing effort. That all changed in 2002, the year that SpaceX was founded. 

Elon Musk tasked SpaceX with slashing the cost of reaching space to unlock bolder exploration and broaden access, with the long-term aim of making humanity multi-planetary. To bring that vision within reach, SpaceX is building fully reusable rockets and spacecraft that could one day help establish a self-sustaining city beyond Earth.

It is no surprise, given the size of the industry and the bold ideas of the company and its founder and CEO, that the SpaceX initial public stock offering was the largest ever, with a $1.77 trillion market capitalization, or total value, when shares began being sold to the public this month. Until now, the IPO for Visa in 2008 was the largest ever, valuing that company at $20 billion. 

All this makes SpaceX the eighth-largest public company by value on the planet, and one of only two in the top 10 with fewer than 20,000 employees.

Market Indexing and Institutional Buying

While the overall valuation of SpaceX is massive, the company is only selling about 5% of all shares, which means investors only have to deploy between $6 and $8 billion to support the offering, with all proceeds going directly to the company. Musk will retain approximately 42% of equity (with about 85% voting power) after the IPO. 

The pattern in many ‘hot’ IPOs is familiar: a strong opening surge followed by a cooling-off period over the next 12 months. Visa was no exception, climbing roughly 50% in its first month as a public company before briefly trading below its IPO price a year later. For patient shareholders, however, the outcome was far more compelling: the total return of Visa shares since coming public is about 2,500%, versus roughly 725% for the S&P 500 through May 31, 2026.

Visa’s macroeconomic backdrop in the throes of the Great Financial Crisis was far different from today’s market, where equities are hitting new highs almost daily. And past performance is no indication of future results. 

Given SpaceX’s expected size at listing, the company is likely to join the Nasdaq soon after its IPO, creating a potential technical tailwind for the shares. Because many ETFs and other passive funds are required to track the index, inclusion would likely trigger incremental buying demand. Analysts expect that index-related flows could begin roughly 15 days after the offering, providing an additional source of near-term support for the stock.

“This year, individual investors have shown a strong tendency to chase winning stocks, which can make market moves bigger and more volatile.”

The expected timeline is as follows: Nasdaq inclusion roughly 15 days following the IPO, following a rule change that allows SpaceX to qualify. S&P 500 inclusion is likely to be delayed by approximately 12 months because the index did not change its rules. (A company must be profitable for addition to the S&P 500, and despite lobbying efforts on behalf of SpaceX, which isn’t currently profitable, Standard & Poor’s refused to change its rules.)

The Active Retail Investor

You and I — the retail investor — may matter more to SpaceX’s IPO than index funds or other passive buyers. This year, individual investors have shown a strong tendency to chase winning stocks, which can make market moves bigger and more volatile. Much of that buying has been concentrated in semiconductor names such as Nvidia, Micron, SanDisk, and Advanced Micro Devices, as well as in leveraged ETFs tied to those trades.

Those gains are now large enough that retail investors could have an outsized influence on the IPO. If even a small share of recent profits is redirected into SpaceX, demand could be powerful relative to the limited number of shares available for trading.

That could lead to two clear outcomes. First, strong retail demand could push the stock well above expectations after the IPO. Second, investors may sell other recent winners to free up cash to buy SpaceX, which could create short-term pressure in parts of the broader market, especially in leveraged funds, where selling can have an amplified effect.

Investor enthusiasm around a SpaceX IPO may be adding fuel to an already stretched stock market. Many Wall Street strategists warn that AI-driven gains have pushed valuations toward historically elevated levels, increasing the risk of speculative excess. SpaceX could intensify those concerns: at nearly 110 times revenue and with no current profitability, its valuation would reflect exceptionally high expectations for future growth. Even at the peak of the late-1990s tech bubble, valuations generally topped out around 10 times revenue, making SpaceX’s projected multiple extraordinary by historical standards.

Still, the IPO market may suggest a different conclusion. More than 1,100 companies went public during the buildup to the tech bubble from 1998 to 2000 before the market eventually broke. By contrast, only about 235 IPOs have come to market over the past three years, including SpaceX and others expected later this year. If IPO volume offers any signal about the broader market, the current rally may still have room to run.

As always, it is difficult to predict if the SpaceX IPO moves the market to even loftier heights, or marks a turning point whereby stocks come back to earth. Either way, it will be one hell of a ride — pun intended.

Jeffrey Liguori is executive vice president of Bradley Foster & Sargent Inc.