SINGAPORE – Several months before its public listing, I thought Elon Musk’s SpaceX would be the trade for me to catch up on missed opportunities in the technology sector.
After all, there are few names in the global markets today that carry the gravitational pull of SpaceX.
The rocket company has all the hallmarks of a market phenomenon: a charismatic founder, a compelling vision of humanity’s next frontier, and a valuation that defies both gravity and conventional financial modelling.
As rumour mills spun private market valuations ever higher, and implied valuations climbed to the stratosphere, the pressure to participate grew harder to ignore.
Still, I hesitated.
When SpaceX went public on June 12, it quickly surged from its IPO price of US$135 to peak at US$225.64 on June 16. The market’s verdict felt unequivocal.
Early investors were minted into paper millionaires almost overnight. Watching from the sidelines, I felt annoyed and foolish, like I had once again mistaken caution for discipline and missed a possibly defining trade of this generation.
That feeling of regret did not last.
The reversal came swiftly. Within days, the stock tumbled 20 per cent amid a broader technology sell-off and concerns over fresh debt issuance, erasing more than US$600 billion (S$744 billion) from SpaceX’s market value in just three days of trade. It is now trading at around US$160.
With the benefit of that correction, my earlier hesitation felt validated.
Still, not buying SpaceX felt less like prudence and more like a failure of imagination.
The bullish case is overwhelming.
SpaceX is not merely a launch provider; it is a vertically integrated space infrastructure company with multiple potential revenue streams.
Its Falcon rockets have already disrupted launch economics, driving down costs in a way that incumbents struggle to match. Starlink, SpaceX’s satellite broadband business, is meanwhile positioned to generate recurring, high-margin revenue at scale.
There are even more speculative extensions: space logistics, interplanetary transport, and a global ambition in defence infrastructure beyond the US.
Overlay these with the “Elon Musk premium” – the market’s willingness to assign extraordinary optionality to his ventures – and the valuation shoots to the moon.
My hesitation was not rooted in scepticism about the technology; on the contrary, SpaceX’s engineering achievements are undeniable.
Nor was it a dismissal of the addressable market, since global connectivity and space infrastructure are vast and growing domains.
Instead, my discomfort lay in the astronomical gap between story and price.
I am not confident that SpaceX will generate acceptable returns within my investment horizon at current levels.
Even before the listing, implied valuations in private markets were beginning to incorporate years, if not decades, of perfect execution.
The problem was not that SpaceX could not become a dominant player in its field, but that the price already assumed it would do so – smoothly, and with limited competition or regulatory friction.
In a June research report, Morningstar said SpaceX was overpriced and valued it at US$63 per share – a 53 per cent discount to the initial public offering price.
The analysts said this was based on mathematics rather than scepticism, reflecting a wide range of possible outcomes for the company’s financial future.
SpaceX’s IPO valuation rests on two unproven bets: making Starship fully reusable at scale, and turning orbital AI data centres into a commercially viable business.
Morningstar expects neither of these technological questions to be answered before 2028, even in the most optimistic scenario.
The company’s core space and connectivity businesses, which have much better visibility and relatively lower uncertainty, are estimated to contribute about US$40 per share.
These businesses form a solid foundation for SpaceX, but markets are excited about the AI segment.
The most optimistic scenario for the AI business sees SpaceX overcoming engineering constraints and rapidly scaling orbital data centres to capture 20 per cent of forecast AI computing capacity by 2040. Only then would SpaceX justify a value of US$154 per share.
But positing just a 7 per cent chance of that happening, the analysts kept their final fair value estimate at US$63.
But as SpaceX resumed its upward trajectory, I questioned whether I had been overly anchored to traditional valuation methods for a futuristic company.
Mega-cap technology companies continue to command premium multiples, and the market has shown a willingness to extend that premium to companies with credible narratives of future dominance.
In that light, not owning SpaceX felt like an omission. This is the psychological tax of investing: It’s not just losses that sting, but also the gains you miss.
But investors do risk overpaying in high-profile and hype-driven IPOs.
An invitation to participate, or the ability to secure an allocation, can create the impression of being early to an opportunity.
In reality, IPO pricing is typically calibrated to maximise proceeds for existing shareholders, leaving narrower margins for latecomers.
When valuations assume years of uninterrupted growth, the investor is no longer buying a business at a discount to its potential. They are buying into a scenario where very little can go wrong.
That is a fragile position, especially in sectors where capital intensity, competition and regulation remain persistent constraints.
SpaceX illustrates this tension. Its investment case seems compelling, but so is its growing list of challenges that investors must weigh.
First, the operational realities. Starlink’s roll-out, while impressive in scale, proved more capital-intensive than many had anticipated.
Customer acquisition costs remained elevated. Regulatory hurdles, particularly in emerging markets, slowed expansion.
Meanwhile, competition in satellite broadband began to intensify, with both established players and new entrants seeking to carve out market share.
Second, the economics of launch services, while structurally improved, did not translate into the kind of margin expansion that the most optimistic projections had implied. Governments and commercial customers, aware of SpaceX’s dominant position, were not inclined to overpay.
Third, and perhaps most importantly, the macro environment shifted. As interest rates rose and liquidity tightened, the market’s tolerance for long-duration growth narratives diminished.
Valuations that were justified by future cash flows are now exposed to greater scrutiny – fundamentals, financial health, funding needs and the ability to deliver, among other traditional metrics.
SpaceX, like many high-growth companies, is finding itself repriced not because its vision has changed, but because the market hype is settling down and reality is kicking in.
Its surprise US$25 billion bond offering on June 22, not even two weeks after its IPO, unnerved investors.
The share price decline that ensued was sharp, shattering the illusion of an unstoppable trajectory and bringing investors back to the realities of a high-growth business and the accompanying risks and execution challenges.
Now that the dust has settled, the honest answer is yes.
The experience has, if anything, sharpened my appreciation for discipline and diversification.
One financial adviser shared that many who bought SpaceX in the pre-IPO phase did not ask a lot of questions. They simply believed in Musk.
Those who rationally analysed the offer documents – SpaceX’s offer document reads like science fiction – ended up not buying.
Jumping in without understanding a company’s business and ability to deliver is more like gambling than investing.
So, read the prospectus. Understand the business model. Assess whether the company is profitable or burning cash and still reliant on external capital. Compare valuations with listed peers, if any.
Most importantly, ask what is being priced in, and what room remains for error.
Diversification, too, is an underappreciated safeguard. Concentrated bets on high-profile names can deliver outsize returns, but they can also amplify losses when expectations unwind.
The goal is not to avoid ambiguity, but to size it appropriately within a broader portfolio where risks are neither ignored nor allowed to dominate.
In most cases, steady compounding across a range of assets proves more durable than conviction concentrated in a single narrative.
The key, then, is not to eliminate regret – a moonshot, if not impossible – but to ensure that decisions are grounded in a coherent framework rather than in reaction to hype or momentum.
Markets will always produce moments that test conviction. SpaceX will continue to evolve, as will the market’s perception of it.
There will almost certainly be further cycles of enthusiasm and doubt, each bringing its own pressures and distortions.
For now, I am content to watch from the sidelines because, at the right price and with the right visibility, there may yet be a better way to participate.
The next big pre-IPO story is never far away, whether it’s OpenAI or Anthropic. When the time comes, I’ll be anchored by one question: Do the numbers match the narrative? Even if I do get a little swept up by the hype.
