Don’t say I didn’t warn you.$SpaceX(SPCX.US) now s

Don’t say I didn’t warn you.

$SpaceX(SPCX.US) now sits at $126/share - a stunning 45% reversal in just one month from its post-IPO peak of $226 and well below its IPO price of $135. SPCX still trades at FY’2026 EV/Revs of 45x.

Source: Financial Review

Iconic Wall Street investor Peter Lynch was not a fan of buying into small IPO floats, and liked to say that IPO stood for “it’s probably overpriced”.

The totally unproven plans to build data centres in space were endlessly dissected. The SPCX prospectus spelled out the ridiculous total addressable market the company was claiming: $US28.5 trillion, close to the entire GDP of the United States. SpaceX’s losses were disclosed and discussed.

Indeed, there may not have been an IPO in world history as closely scrutinised as this one. If investors still wanted to buy in despite all the risks, they deserved what they got.

That’s fair enough, at one level, but it ignores the cynical way that SpaceX, its investment bankers and its advisors structured this IPO to engineer short-term gain – and a $US500 billion fee pool – with seemingly little concern for long-term investors.

As Schroders head of Australian equity Martin Conlon wrote this week, investment banks know that “the vast pools of money directed towards rules-based investment processes”, such as passive investing and algorithmic trading, have changed the way markets work.

And so they successfully lobbied index market operators such as Nasdaq and FTSE Russell to – in the words of Conlon – pervert and game the rules so that large, loss-making companies such as SpaceX could gain almost immediate inclusion in major sharemarket indices.

The SPCX bankers successfully lobbied index market operators such as Nasdaq and FTSE Russell to game the rules so that large, loss-making companies such as SpaceX could gain almost immediate inclusion in major sharemarket indices.

The SpaceX float raised a historic $US85 billion in its IPO - 3x the size of the next largest IPO in history. But the bankers knew that they could create a “highly imbalanced supply/demand situation, where a free float of less than $US100 billion would set the price for more than $US2 trillion in paper market value.

Here we are today and SPCX still looks ridiculously overvalued at 45x 2026 EV/Revs. Yet 80% of the 36 WS analysts who have initiated coverage of SPCX have buy ratings on the stock. And only one - Morningstar, which presumably can’t earn future banking fees on SPCX - has a sell rating. That says it all.