The Trillion Dollar Trio
This year is shaping up to be a record setting year for IPO’s.
What is an IPO? An IPO (Initial Public Offering) is when a company decides they want to move from a private company to a public company. They are required to go through a complex process involving registration with the SEC, release of company information and disclosures, and the sales of shares to investors.
Once approved for an IPO, a company works with one, or often many, investment banks to begin taking orders for shares at a specified price. Depending on the demand, the company may choose to raise or lower their target IPO price as they sell shares. Investors who subscribe to the IPO purchase shares and are able to sell those shares on the initial trading day. Insiders often have periods in which they are “locked up” from selling shares.
Why is this historic? This year we will likely see the IPO of a variety of AI related stocks. SpaceX, under the symbol SPCX will begin trading this Friday, June 12th. They are seeking to raise $75 billion at a share price of $135/share at a market cap of $1.77 trillion. This will be the largest IPO ever recorded. Previously, Saudi Aramco was the largest IPO raising $25.6 billion with a valuation of 1.7 trillion in 2019.
Later this year, both Anthropic (the maker of the Claude AI model) and Open AI (maker of the ChatGPT model) have announced plans to go public, both with valuations over $1 Trillion. This would potentially place this trillion-dollar trio of companies as top 10 companies in the broader US market, however, for inclusion in common indexes like the S&P 500, there are typically one-year waiting periods and earnings requirements that must be met.
Is SpaceX appropriately valued? There are various ways to measure if a company is trading at a fair valuation. The most common is Price to Earnings – or the per share price of a stock relative to the per share earnings or profits the company is generating. This is the P/E ratio. However, for unprofitable companies, like SpaceX, we often use the P/S ratio – or Price to Sales. This counts the total revenue of a company, not just its profit.
SpaceX will likely trade at 100 times Sales. This is astronomically high. As a reference, below are key large technology companies and their respective P/S ratios.
Company P/S Ratio
SpaceX (Targeted IPO) 100.0x
Nvidia 19.79x
Tesla 14.76x
Alphabet (Google) 10.58x
Apple 10.10x
Microsoft 9.76x
Meta (Facebook) 6.99x
Amazon 3.86x
Source: Yahoo Finance (as of 6/9/2026)
While SpaceX top-line revenue is expected to scale aggressively, it will have to increase revenue five to ten times over its current baseline to be considered fairly valued. While this is certainly obtainable over a longer period of time, the path to get there is uncertain. To be sure, SpaceX has a variety of impressive companies – SpaceX which has a near monopoly on the rocket industry, Starlink which provides cell and internet service via satellite, xAI which produces the Grok AI model as well as data center usage that both OpenAI and Anthropic use, as well as the X platform (formerly Twitter). The portfolio of companies and historic innovation is from SpaceX is certainly noteworthy.
Should you invest in SpaceX? For long-term investors, there will be plenty of time to build a position. You may even unknowingly hold a significant portion of SpaceX through mutual funds and index funds that hold the stock – whether it be in your 401(k)s or elsewhere.
However, it is worth giving the company time to cycle through a few public quarterly reports in order to make a realistic assessment on its actual revenue growth and earning potential. Any capital deployed before that is pure speculation. We would caution investors to avoid over-exposure to one particular stock and to dollar cost average – the strategy of investing at regular intervals to gradually build a position over time – to smooth out the inevitable IPO volatility.
Don’t jump the gun, but don’t bury your head in the sand. It’s important to separate excitement from strategy. Revolutionary companies can create great opportunities for investors, but even great companies can be poor investments. Patience, diversification, and disciplined investing will matter much more than chasing the headlines. Successful investing is rarely about being first, and almost always about being consistent and sticking to a strategy over time.
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