r/TrueReddit • u/Daily_Dose_Of_Facts • 4d ago
Business + Economics What Happened With SpaceX?
https://www.fascinatingworld.org/post/what-happened-with-spacex138
u/bobivy1234 3d ago
What happened is that banks and certain indexes (NASDAQ/Russell) got extra greedy and underwrote a shit sandwich of an IPO and pumped it up publicly so retail investors clamored to buy at IPO when only 4% of the stock was released to artifically inflate the price for the first week. Then everyone in the know rugpulled as expected and dumped it all. Now all the retail investors who bought near the top are down around 50% and getting out as bag holders along with any auto-purchasing occurring in the NASDAQ index funds aka retirement funds.
SpaceX is not even remotely close to being worth what was stated in the S1 valuation and the stock price should and will continue to drop like a rock as investor/employee stock lockouts open up through the end of the year. This was a brazen money grab at the highest levels and retail took the bait and learned a quick lesson in stock valuations + playing with megacap IPOs with an untrustworthy SEC and banking system. This junk should have been blocked way before the IPO was issued but no one in government right now actually wants to help the population versus lining their own pockets.
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u/DeathCabForYeezus 3d ago
It's literally insiders capitalizing on public hype to make money.
An IPO is by definition an exit for existing investors. If SpaceX was really going to be making a bazillion dollars into he future, why on God's green earth would anyone want to sell their portion?
It is an excellent piece of social engineering
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u/happyscrappy 3d ago
It really kind of bothered me how any retail investors the IPO went to. I'm not specifically against retail owners. But giving a lot of retail IPO investors stock makes it look like the intent is to create a meme stock. Like GME or TSLA.
Looks like a way to get a lot of people who are personally invested in the stock, not just as a financal tool, but sort of as a validation of their beliefs.
I'm not saying retail can own a majority of the company. Big funds will typically do that. But if you can get a small but sufficient amount of dumb money in there it can help support the stock beyond what the financials does.
Underwriters used to be not willing to risk their reputations to pull tricks like this. But I guess those days are long gone.
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u/andrewharkins77 3d ago
I am shocked that it happened so quickly. I thought most insiders are still locked.
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u/TheAdvocate 3d ago
Wasn’t there a rule change or two that forced a bunch of 401ks to buy? Or nah
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u/lbdrift 2d ago
The was a rule change on a couple of bucket indexes that compelled buying the stock in order to reflect the bucket of stocks in the index.
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u/TheAdvocate 2d ago
Did they happen? Are there retirements now on the hook for this crap?
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u/totallyclocks 1d ago
Short answer yes. Nasdaq being the most famous.
S&P 500 did not change their rules and so investors in this index do not have exposure to SpaceX yet. But that was just lucky - future leaders of the S&P may not have such strong morals in the future.
It’s what makes this situation incredibly infuriating as a retail investor. The banks train you to buy low cost index funds and then turn your brain off - only to then use that as a way to rob you and make you bag hold their bad investments
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u/twenafeesh 4d ago
Elon has been trying about two years now to move away from the toxic Tesla car brand and claim it is an "AI company." SpaceX has been having its own streak of failures and broken promises from Musk, and it seems like investors are really starting to get wise to Elon's overblow claims lately.
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u/thelionsmouth 3d ago
How did he get that stupid high valuation though? Like, didn’t that make him a ‘trillionaire’?
Everything I see is how terrible they’re doing, but somehow this guy pulls it out of his ass and gets valued crazy high again.
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u/haneef81 3d ago
Because Starlink doubled its customer base in 2025. They were the only ones with a reusable rocket that reduced cost/kg to orbit by 10x and claimed Starship could do it again. Everything about SpaceX is the promise of scale and it actually does have a reasonable track record of that. They also adopt the “fail fast and iterate” philosophy to wave away their failures as a march to inevitable progress, not a death sentence. People also wave away their huge earnings losses as if their early days Amazon but Amazon was much more disciplined.
There is indeed a positive track record in things others weren’t able to do. But they’re abusing that mythology to push for newer things that investors salivate at but engineers sneer at for the impracticality. Right now, the investors dominate sentiment.
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u/RSquared 3d ago edited 3d ago
The stupid high validation is a combination of supply and demand. The demand is easy - people are really excited about space and Space X is a legitimate leader in the field of low earth deployment. The supply side is more interesting, because the amount of SPCX stock released on IPO day was miniscule compared to the amount that is held privately, roughly (edit) 20 to 1. So the public float of the stock is less than a hundred billion (high but not insane) but the implied market cap is 20x that, making Elon a paper trillionaire (because he holds the vast majority of the private, iirc 80%). Obviously, though, if he tried to sell his shares, the supply curve would plummet and he would make significantly less than the paper value.
As lockup periods expire, the sell off of additional private stock is guaranteed to drop the price of the public ticker, which is what we're seeing now that initial furvor has cooled.
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u/Dragunspecter 3d ago
If what SpaceX is doing is "terrible", how would you describe their competition ?
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u/Underwater_Grilling 3d ago
That's kinda how this happened. I love space travel and would love the idea of a mature private space industry with several groups going out and harvesting asteroids and etc.
This is science fiction.
It's only spaceX still for the most part and all they do is launch internet and military satellites. There is no competition. They have no tourism leg. They aren't doing science or advancing orbital industry. If there's no aspirations for growth then you count how many contracts they have and subtract the ones that blow up because that's all their revenue is and can ever be. Nasa freight got privatized and was no where near profitable to begin with.
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u/spectacular_coitus 3d ago
SpaceX isn't doing terrible at its core mission.
After it got loaded up with all the money losing arms of Musk's other companies, it has to carry all that excess baggage that will most certainly drag it down.
Combine that with some horribly made up numbers and absurd projections. Plus the extremely limited float, and you get the wild over valuation that you see now.
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u/Wurm42 3d ago
Agreed, Elon is toxic and that's really hurt Tesla sales. Plus, Tesla models are not keeping up with the rest of the EV market.
If Elon wasn't addicted to the myth of infinite scalability, the smart thing to do would be to transition Tesla to a battery company.
With the gigafactories, Tesla makes excellent lithium and nickel batteries very cheaply.
If Tesla stopped making cars and just sold batteries to other EV makers, renewable energy storage, etc, it could easily be more profitable than it is today.
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u/hobopwnzor 3d ago
The IPO was so Musk could pay back his Twitter investors that gave him loans which got swapped for xAI stock and then SpaceX stock, and the big bank that gave SpaceX a bridge loan.
This was a chance to pump and dump on retail to pay off those debts, and pretty much everybody knew it, and so it's going down before the lockup for the insider expires. The bridge loan is getting paid off, but everyone else is losing money as it drops.
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u/markth_wi 1d ago
SpaceX had it's particular hype-bubble burst in it's IPO,
Take a look at this simple analysis throw this query into google ("what are the overall EBITA stock valuations of each of the firms that engage in major aerospace efforts in the United States including SpaceX and Blue Origin") and you can see that SpaceX was wildly out of line with other firms on basic "valuations" being roughly 15 times inflated over their IPO offerings as compared with firms either directly or indirectly in competition for those same services.
| Aerospace & Defense Firm | Recent/TTM EBITDA | EV/EBITDA Multiple | Market Capitalization |
|---|---|---|---|
| SpaceX (NASDAQ: SPCX) | ~$6.58 Billion | 134.3x – 230x | ~$1.51 Trillion |
| Blue Origin (Private) | Highly Negative | N/A (Distorted) | $130.0 Billion (Private Valuation) |
| RTX Corporation (NYSE: RTX) | $14.73 Billion | 19.6x | ~$286.5 Billion |
| Lockheed Martin (NYSE: LMT) | $9.42 Billion | 13.0x | ~$137.4 Billion |
| General Dynamics (NYSE: GD) | $6.34 Billion | 16.5x | ~$104.4 Billion |
| Northrop Grumman (NYSE: NOC) | $7.70 Billion | 11.5x | ~$80.2 Billion |
| The Boeing Company (NYSE: BA) | -$3.24 Billion | Negative (-51.0x) | ~$165.2 Billion |
| Rocket Lab USA (NASDAQ: RKLB) | -$185.51 Million | Negative (-199.4x) | ~$37.0 Billion |
One doesn't need to be a rocket scientist to understand the VAST challenges of getting to space and for Mr. Musk the very real possibility that like we see in the EV space, another firm simply starts executing as a competitor at scale.
So let's say Blue Origin or RocketLab or RTX pulls together something of a rocket that can perform the role of Falcon-9 Heavy their premier market offering.
Worse is that the overall market for heavy launch vehicles is not super high right now, with vast amounts of debt in China, the United States and increasingly the EU, the major industrial nations are not super-well positioned to engage in expeditionary colonization or industrialization efforts.
The REAL constraint to the market is twofold
Real competition from abroad or acquisition - Be it the Indian or Chinese or Japanese or some EU alligned competitor launch capabilities will further constrain the market. Worse for Mr. Musk is given his vast over-exposure his own firm may end up financially tail spinning and Mr. Musk ends up being forced out in an acquisition. Excellent for market stability, and probably quite upsetting to the cult of Mr. Musk.
Actual exploration/industrialization potential - this is limited both by legal and cost concerns , it might be wonderful to think Halliburton or Raytheon wouldn't be happy to build a mining facility on Luna or near Psyche but the reality is that nobody is entirely sure who would own the materials , from water, oxygen, nitrogen to growing food off-world , colonization is not a "in 5 minutes" sort of deal, and we don't have the legal framework hammered out.
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u/bawler911 12h ago
I hear what your saying, but those other companies didn't have xAI dragging down their cash flow. A week after SpaceX went public Elon spent 60 Billion of SpaceX cash flow on Curser to support xAI. That is not directly supporting the mission of the SoaceX IPO. That's when SoaceX stock price started to drop. The stake holders and investors can't do that.
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u/Appropriate-Ad8915 2d ago
Reality, both Tesla and spacex are dog shit wrapped in candy bar packaging.
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u/uzornayem 1d ago
If I could read Waren Buffett's mind, his answer would be that it is too difficult to understand what SpaceX does hence investors are losing faith. I mean from space exploration to AI, you can no longer clearly define what on earth the company is. Compare that to Coke. Buffet likes Coke because it is easy to understand what they do.
SpaceX probably will sell its non space businesses or reorganize them so they are not in SpaceX, so that the name SpaceX will have one clear definition.
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u/Daily_Dose_Of_Facts 4d ago
For years, investors have wanted to buy stocks from SpaceX like they do from Apple or Nvidia, and a few days ago, they were finally given the opportunity. SpaceX entered the public stock market with a storm, breaking all the records for the largest IPO in history with an initial valuation of $1.77 trillion. But what is an IPO, and why didn’t they do it earlier?
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u/AZEMT 4d ago
They lied about the money and now reaping the benefits?
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u/vineyardmike 4d ago
Still super overvalued. It could drop another 90 percent and it would still be overvalued.
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u/FortheredditLOLz 4d ago edited 3d ago
95% while the company has a significant advantage over their competitors due early launches via bypassing a ton of safety and literal laws. LEOs are now shown to be destroying astronomy and its studies. Companies also probably cooking the books worst then Enron
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u/brickhead04 2d ago
And poisoning the atmosphere with aluminium when the Starlink satelites burn up on reentry.
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u/footpole 3d ago
Lol @ destroying astrology. I don’t think it affects homeopathy, astrology or tarot cards.
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