How to Protect Your Portfolio From SpaceX and OpenAI

A warning from Whitney Tilson... The most overhyped, overvalued large caps of all time... The next coming of WeWork, but on steroids... SpaceX's odd mix of businesses... A looming crisis for your retirement savings...

Editor's note: Today, we're bringing you a special Friday Digest from Stansberry's Investment Advisory lead editor Whitney Tilson...

The occasion is the pending mega-cap IPOs we've written about lately, including from Elon Musk's SpaceX and ChatGPT creator OpenAI. Whitney has a strong take on both of these companies going public. As you might gather from the title of this essay, he's not bullish...

In this essay, Whitney details why he's skeptical of the excitement around these two stocks. He examines the balance sheet of SpaceX (since it has filed a public prospectus already and OpenAI hasn't), analyzes the company's "odd mix of businesses," and shares perspectives on the subject from a few friends.

This is the type of analysis Whitney regularly provides in his free e-letter, Whitney Tilson's Daily, and our flagship Investment Advisory... And it's the process he applied while running his own Wall Street hedge fund. Enjoy... and be warned...

Two of the biggest IPOs in history are in the pipeline – for SpaceX and OpenAI...

And they're competing to claim the title of the most overhyped, overvalued large-cap stock of all time.

The winner will wrest the title from Palantir Technologies (PLTR), which briefly traded for more than $200 per share and more than 100 times revenues last November.

The data-analytics firm is down about 30% since I (Whitney Tilson) added it to my "Stinky Six" list of stocks to avoid on October 29, and it still has a lot more room to fall, in my opinion.

(My list is down to five after I removed one stock last month.)

SpaceX has the lead in this shameful race. Elon Musk's space company looks to start trading at nearly 100 times revenues – despite tepid 15% top-line growth last quarter and large, accelerating losses.

But pulling up on the outside, challenging SpaceX for the title, is OpenAI – the greatest cash-burning furnace of all time...

OpenAI lost $8 billion in 2025, and it expects to burn $218 billion between 2026 and 2029. That's 23 times what Tesla (TSLA) torched during its entire cash-incinerating phase from 2007 to 2018.

It would be one thing if OpenAI was on track to dominate AI. But the developer of ChatGPT is being surpassed by Alphabet's (GOOGL) Google Gemini, Anthropic's Claude, and cheap Chinese large language models ("LLMs").

I think OpenAI is the next coming of WeWork, but on steroids...

My readers have heard me write about the co-working landlord dozens of times over the years. In 2019, I warned that it had a "fatally flawed business model" (buying office buildings and renting them back out at a loss). WeWork went bankrupt four years later.

WeWork's peak valuation was a "mere" $47 billion, whereas OpenAI will be looking for a valuation north of $1 trillion.

Who will win this race to the bottom? I expect both SpaceX and OpenAI to take a nosedive from their opening-day close price within a year or two. But I think the latter will be the ultimate loser.

To understand why I'm so bearish on both IPOs, let's take a look at the financials. OpenAI hasn't yet filed to go public, so...

Today I'll analyze SpaceX...

In its May 20 Form S-1 filing with the Securities and Exchange Commission, you first have to make your way past 14 pages of rocket and space photos – which actually makes sense to distract investors from noticing the ugly financials.

The full-year income statement shows that SpaceX was profitable (albeit barely) in 2024, then swung to a big loss in 2025. But at least revenue growth was a robust 33.2%:

However, SpaceX's performance was much worse in the first quarter of 2026. Revenue growth was a mere 15.4%, and losses ballooned to $4.3 billion:

To understand what happened at SpaceX, we need to look at the breakdown by segment...

SpaceX has three businesses: launching rockets into space (for itself and others)... Starlink, a global satellite-Internet constellation... and xAI, which includes social network X (formerly known as Twitter) and generative-AI chatbot Grok.

As you can see in the tables above, the company's gem is Starlink. It more than doubled its number of subscribers over the first quarter of 2025, and it's highly profitable.

(I can tell you that Starlink is a game changer based on my six trips to Ukraine in the past three years. The service is a pillar of the country's defense infrastructure.)

Though it lost money in the first quarter, the space-launch business is also unparalleled. It accounts for more than 50% of all worldwide orbital launches and more than 80% of all mass sent into orbit.

But a totally unrelated business is dragging down these two great businesses, which do belong together.

Musk's AI venture, xAI, is burning huge amounts of cash in an attempt to keep up with its much larger competitors – not just Google but also Meta Platforms (META), Amazon (AMZN), and Microsoft (MSFT), among others.

What's this odd mix of businesses worth?...

Maybe 5 times revenues? If we assume 15% growth for the entire year, that would be $21.5 billion of revenue, which would value the company at $108 billion.

But since investors love anything AI-related these days, let's be generous and say it's worth 10 times revenues. That would be a $215 billion valuation.

Any way you cut it, this is a tiny fraction of the $1.75 trillion market cap at which SpaceX looks to go public.

My friend and New York University marketing professor Scott Galloway agrees...

In his Prof G Media newsletter, he wrote:

If investors take the sum of the three business lines – space, connectivity, and AI – and assume that each segment will command a multiple that is twice as high as competitors, the sum of those parts equals about $1 trillion.

So how are SpaceX's bankers explaining the target $1.75 trillion valuation? By telling investors that the company's total addressable market (TAM) is the size of the entire U.S. economy – $28 trillion. That target market includes an estimated $22.7 trillion in revenue from enterprise applications. That is 30x larger than the entire existing enterprise software market.

It also assumes that every single household in the world will start using Starlink for WiFi.

The implied growth is so ambitious that SpaceX is targeting a valuation higher than Meta, Broadcom, and Berkshire Hathaway – while having lower revenues than Macy's.

And don't even get me started on the absurd corporate governance (or lack thereof). As Bloomberg columnist Matt Levine wrote:

The upshot is that SpaceX shareholders can't sue for breaches of fiduciary duty, and they can only barely sue for securities fraud...

If you are buying SpaceX stock to tell Elon Musk what to do, you should stop. If you are buying SpaceX stock because you want exposure to the space/AI business but you have your doubts about current management, you should stop. If you are buying SpaceX stock because you like Elon Musk and want to go along for the ride with him, yes, that's correct, that's the investment thesis here...

Musk's gonna do whatever weird stuff he wants, and if you don't like it that's your problem.

A crisis is looming...

The shameful IPO horse race between SpaceX and OpenAI would be bad enough if they were "just" responsible for the destruction of hundreds of billions of dollars invested directly in these IPOs.

But the inevitable collapse of these shares will cause a far greater catastrophe for millions of investors who don't think they're exposed to these overhyped offerings and have no intention of buying SpaceX or OpenAI.

You see, these IPOs are being used to harvest the retirement savings of 115 million Americans.

I've been working with one of my most trusted research partners to work out the details of this looming calamity. We're recording an emergency briefing to explain what we have discovered and how you can protect yourself from what's about to happen.

We plan to release our briefing soon. We'll be sharing details about when and where you can watch it here in the Digest and in my daily e-letter, Whitney Tilson's Daily. I urge you to keep reading to make sure you don't miss it.

P.S. I welcome your feedback – send me an e-mail: feedback@stansberryresearch.com.

New 52-week highs (as of 6/4/26): Applied Materials (AMAT), ASML (ASML), Alpha Architect 1-3 Month Box Fund (BOXX), Cisco Systems (CSCO), DigitalOcean (DOCN), Exelixis (EXEL), Franklin FTSE Japan Fund (FLJP), W.W. Grainger (GWW), Nucor (NUE), Ryder System (R), State Street SPDR Portfolio S&P 500 Value Fund (SPYV), and Twist Bioscience (TWST).

In today's mailbag, we have a question about our annual Stansberry Research Report Cards. Do you have a question or comment? E-mail us at feedback@stansberryresearch.com.

"Are you still publishing a report card on the various publications, and where can I find them please?" – Stansberry Alliance member Scott T.

Corey McLaughlin comment: Yes, we are, and proud of it. You can find our yearly report cards about our publications and links to the full archives, which go back to 2006, in subscribers' "Extra Features" section of the Digest page on our website. Click here to check them out.

Best regards,

Whitney Tilson
June 5, 2026