We're paying for success that hasn't been achieved yet
As Elon Musk prepares to bring SpaceX to public markets at a $2 trillion valuation, Wall Street finds itself once again confronting a question older than finance itself: how much is a dream worth before it becomes real? The company's core businesses — rockets and satellite internet — are formidable, yet the price being asked rests heavily on futures not yet written: lunar bases, Mars colonies, space-bound data centers. Whether this moment is remembered as the dawn of a new industrial era or as the high-water mark of speculative excess may depend less on SpaceX's engineering than on the patience and nerve of those who choose to believe.
- SpaceX is seeking a $2 trillion valuation — roughly 100 times its annual revenue — forcing investors to decide whether Musk's unbroken record of defying skeptics is worth betting civilization-scale money on.
- Tesla's 3,000% decade-long surge has left many analysts haunted by the cost of disbelief, and that fear of missing out is now actively shaping how Wall Street approaches SpaceX's pricing.
- Even respected skeptics like NYU's Aswath Damodaran, who prefers a $1 trillion figure, concede that SpaceX's competitive lead in rocketry gives its speculative upside more credibility than Tesla's ever had.
- Critics like Michael O'Rourke see something more ominous — a company being priced on achievements not yet made, with retail investors invited to absorb $22.5 billion of an offering that he believes marks a market peak.
- The IPO's structure, targeting individual traders for nearly a third of the offering, will test whether the same retail enthusiasm that carried Tesla can be summoned again at a scale that would dwarf all prior individual investment in Musk's ventures.
Elon Musk is preparing to take SpaceX public at a $2 trillion valuation, a number that has divided Wall Street into true believers and alarmed skeptics in roughly equal measure.
The case for the bulls rests on history. Tesla, once dismissed as a vanity project, now trades at forward price-to-earnings multiples more than five times Apple's — and those who held on through the doubt were rewarded with nearly 3,000% gains over a decade. That experience has changed how analysts approach Musk's companies entirely. Rather than anchoring to current earnings, they price in what academics call "optionality" — the latent value of futures that may or may not arrive. For SpaceX, that means assigning real dollars to space-based data centers, a lunar base, and eventual Martian colonization. Ark Investment Management has endorsed a $1.75 trillion figure, calling it a plausible trajectory for the company's rocket and AI businesses combined.
NYU finance professor Aswath Damodaran would prefer a valuation closer to $1 trillion, yet even he acknowledges that SpaceX's competitive dominance in rocketry gives its speculative premium more grounding than Tesla's ever had. "The optionality is richer in SpaceX," he said, adding that fear of missing out has become a genuine market force — analysts buying not out of conviction but out of dread at being left behind again.
The skeptics, however, are not quiet. Michael O'Rourke of Jonestrading, with over thirty years on Wall Street, calls the valuation unjustifiable for a company generating roughly $20 billion in annual revenue. "We're paying for success that hasn't been achieved yet," he said, warning that the IPO carries the hallmarks of a market top. UBS analyst Joseph Spak has cautioned that the $25 billion SpaceX plans to spend this year on physical AI infrastructure is only the opening bid.
The offering itself will be a referendum on retail faith: SpaceX plans to direct up to 30% of the IPO — some $22.5 billion — to individual investors, a figure that would more than double all net individual purchases of Tesla over the past year. For O'Rourke, that detail is not a feature but a warning. "When we look back a year from now," he said, "I think this will be a key signal."
Elon Musk is preparing to take SpaceX public at a valuation of $2 trillion, a figure that has split Wall Street into two camps: those who believe his track record justifies the price, and those who see it as a warning sign of market excess.
Musk has spent the last two decades turning speculative ideas into functioning businesses. Tesla, his electric vehicle company, now trades at valuations that dwarf even the most expensive of the Magnificent Seven tech stocks—its forward price-to-earnings ratio is more than five times Apple's. This success has fundamentally changed how analysts value his companies. They no longer focus primarily on current earnings or near-term revenue. Instead, they price in what academics call "optionality"—the value of future possibilities that may or may not materialize. For Tesla, that means betting on autonomous vehicles, artificial intelligence, and Optimus, a humanoid robot project that has been in development for over four years. For SpaceX, it means assigning real dollar value to plans for space-based data centers, a lunar base, and eventually a colony on Mars.
Aswath Damodaran, a finance professor at New York University and author of several books on corporate valuation, is skeptical of the $2 trillion target. He would prefer a valuation closer to $1 trillion. Yet even he acknowledges that SpaceX has enormous upside potential. "The optionality is richer in SpaceX than in Tesla," he said in an interview. "SpaceX is so far ahead of the competition right now that it's in a better position than Tesla to realize that optionality." The premium that analysts assign to Musk's ventures rests entirely on his history of making early believers very wealthy. Tesla's stock has risen nearly 3,000 percent over the past decade.
That success has created what Damodaran calls a powerful force: fear of missing out. Many analysts have already decided they will buy SpaceX shares simply because they cannot afford to be left out if the company delivers on its promises. "The FOMO is strong because they've seen what happens when they miss," Damodaran said. Ark Investment Management, which holds stakes in both SpaceX and Tesla, has endorsed a $1.75 trillion valuation, arguing that it reflects "a plausible trajectory" for the company's core rocket and artificial intelligence businesses. The firm noted that Musk has repeatedly surprised skeptics by accelerating timelines that others thought impossible.
But the skeptics are equally vocal. Michael O'Rourke, chief market strategist at Jonestrading Institutional Services with more than three decades on Wall Street, calls the valuation unjustifiable. SpaceX generated roughly $20 billion in revenue last year, he notes, which means the company is being valued at approximately 100 times its annual sales. "We're paying for success that hasn't been achieved yet," O'Rourke said. "This is a situation loaded with excessive enthusiasm that has nothing to do with investing in a company based on its ability to generate profitable returns." Joseph Spak, an analyst at UBS, has warned clients that building physical artificial intelligence is expensive—the $25 billion SpaceX plans to spend this year is only the beginning.
The IPO itself will test whether retail investors, who have been crucial to Tesla's rise, will show up in force. SpaceX plans to sell up to 30 percent of the offering to individual traders, which would amount to $22.5 billion in a $75 billion offering. That figure would more than double the total net purchases of Tesla by individual investors over the past year. For O'Rourke, the SpaceX IPO carries a darker meaning. "These are the things you see near market tops and in bubbles," he said. "When we look back a year from now, I think this will be a key signal."
Notable Quotes
The optionality is richer in SpaceX than in Tesla. SpaceX is so far ahead of the competition right now that it's in a better position than Tesla to realize that optionality.— Aswath Damodaran, NYU finance professor
These are the things you see near market tops and in bubbles. When we look back a year from now, I think this will be a key signal.— Michael O'Rourke, Jonestrading chief market strategist
The Hearth Conversation Another angle on the story
Why does Musk's track record matter so much here? Tesla was also speculative once.
Exactly. Tesla proved the skeptics wrong. It rose 3,000 percent in a decade. That success is now the entire foundation for SpaceX's valuation. Investors aren't pricing in what SpaceX does today—they're pricing in what Musk might do tomorrow.
But SpaceX's future businesses—space data centers, Mars colonies—those are even more speculative than Tesla's robotaxis.
They are. And that's the problem some analysts see. You're valuing a company at $2 trillion based on plans that don't yet exist and may never be profitable. But others argue that SpaceX is further ahead of competition than Tesla ever was, so the odds are better.
What's the FOMO angle really about?
It's about fear. Analysts watched Tesla soar and made money for their clients. If they say no to SpaceX and it works out, they look foolish. So they buy in, not because the math works, but because the cost of being wrong feels worse than the risk of overpaying.
Is there any hard evidence that space data centers would actually work?
Not really. Even if they become real, there's no proof they'd be cheaper than data centers on Earth. That's the gap between the vision and the business case.
So what happens if this IPO is the peak?
Then in a year or two, people will point back to this moment and say: that's when we knew the market had gone too far. It becomes the cautionary tale.