Will SpaceX’s $1.75 Trillion IPO Valuation Survive Friday’s Market Rout?

Tech Rout Pressure Is Rewriting Risk in Real Time

• The tech laden Nasdaq-100 tumbled 4.8% on Friday
• The PHLX Semiconductor Index plummeted 10.3%
• Marvell Technology (NASDAQ:MRVL) plunged 16.7%
• Micron Technology (NASDAQ:MU) dropped 13.3%
• Nvidia (NASDAQ:NVDA) fell 6.2%

A Valuation Built on Execution Without Error

• Starlink scaling into a global broadband cash machine
• Starship achieving reliable, low-cost orbital economics

Why It Could Flop — and Why It Still Might Work

• Valuation strain: $1.75 trillion implies near-perfect execution for a company not yet profitable, meaning the stock could drop significantly after the initial hype
• Tech sector contagion: Friday’s selloff shows investors are already reducing exposure to extended valuation assets and could become more cautious about overhyped, non-profitable, or high-valuation companies
• Lack of immediate profits: Despite dominating the launch market, SpaceX reportedly lost $4.3 billion in the first quarter, which may cause investors to hesitate once the initial excitement settles
• IPO history: 60% of new listings underperform over three years, making SpaceX’s debut a potential “trap” for long-term investors

• “Must-own” status: SpaceX is widely viewed as foundational infrastructure for space and communications and the fear of missing out — FOMO — may override the fears of a failed IPO
• Institutional backstop: Expected inclusion in major benchmarks like Nasdaq-100 and FTSE Russell indices could force passive index inflows, and retail investors aren’t the only ones gripped by FOMO — many institutional investors feel they cannot miss out on what could be the biggest IPO in history
• Supply scarcity: About 78% of IPO proceeds are already committed by investors, limiting free float and tightening supply-demand dynamics

Key Takeaway

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