"October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February." - Mark Twain

 

With SpaceX (SPCX) beginning to trade publicly, we wanted to share a balanced perspective on the initial public offering ("IPO") and what it may mean for your portfolio.

Demand for the SpaceX IPO has been extraordinary, with the deal reportedly four times oversubscribed at a fixed price of $135 per share, implying a $1.8 trillion valuation. The enthusiasm is understandable. SpaceX is a genuinely transformative company, and Elon Musk has a track record of executing on bold visions - just not always on the originally envisioned timeline. The company's stated total addressable market of $28.5 trillion - spanning AI, connectivity, and space - reflects its aspirations to become a vertically integrated AI and infrastructure platform, not just a rocket company.

 

We want to be transparent about how we handle situations like this: our firm does not purchase IPOs directly. The early days of trading are simply too volatile, and valuations at the time of an IPO are nearly impossible to ascertain with any real confidence. As you'll see below, SpaceX is a perfect example of why we hold this view.

 

That said, you will have exposure to SpaceX. Because we own broad index funds as part of your portfolio, SpaceX will be added to your holdings automatically as it is included in major indices - the Russell 2000 as early as day 5, the MSCI around day 10, and the Nasdaq 100 around day 15. This means you'll participate in the company's long-term growth potential without taking on the risks of first-day speculation.

 

In the near term, the stock is likely to see significant upward momentum driven by that very index inclusion process, as index funds are forced to buy and institutional managers add the name to avoid tracking error relative to their benchmarks. Perpetual futures contracts are already pricing the stock around $180, well above the $135 IPO price. Market commentators have flagged concern that inexperienced retail investors placing market orders - rather than limit orders - could push the stock to unsustainable levels in the opening days of trading.

 

Beyond the first 15 trading days, the picture becomes more complex - and is a key reason we prefer to let index inclusion do the work rather than speculate at IPO. At roughly 90x Calendar Year 2025 revenues, the stock is priced for near-perfection, a steep premium compared to Tesla, another Musk company, which trades at just 16x revenues. Revenue growth has been decelerating (35% in 2024, 33% in 2025, 15% in Q1 2026), while net losses and capital expenditures (capex) have been increasing sharply. SpaceX has indicated that hundreds of billions in additional capex will be required over the next five years to build out the AI and data center infrastructure needed to pursue its ambitious total addressable market (TAM).

 

The broader market has also recently penalized Google, Amazon, Oracle, and Meta for similar large-scale capex commitments. SpaceX will be entering a market dominated by well-capitalized hyperscalers, and does not yet have a leading AI model of its own. Additionally, the sheer volume of capital being raised this year - SpaceX, Anthropic, and potentially OpenAI together could raise approximately $200 billion - raises legitimate questions about market liquidity at a time when 30-year Treasury yields are at their highest levels in two decades.

 

SpaceX is a remarkable company with significant long-term potential, and we are comfortable owning it as part of a diversified index strategy. However, buying it directly at IPO - at current valuation levels and amid first-day frenzy - is a risk we don't believe is warranted. Our approach is designed to give you thoughtful, disciplined exposure to opportunities like this one, without the speculation.