SpaceX and OpenAI's IPO horse race spells catastrophe for investors
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 100 times revenues last November. The data analytics firm is down nearly 30% since I added it to my "Stinky Six" list of stocks to avoid on October 29 (and it still has a lot more room to fall).
SpaceX will take the lead in this shameful race because it's going public first. It's expected to start trading a week from today at an estimated 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, which I last discussed on June 1, as well as Anthropic and cheap Chinese large language models ("LLMs"), which I covered on March 11.
I think OpenAI is the next coming of WeWork, but on steroids... WeWork's peak valuation was a "mere" $47 billion, whereas OpenAI will be looking for a valuation north of $1 trillion.
So who will win this race to be the most overhyped, overvalued large-cap stock of all time? I expect both SpaceX and OpenAI to crater from their opening-day closing prices 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, starting with SpaceX (OpenAI's filing isn't public yet)...
SpaceX's May 20 form S-1 filing with the Securities and Exchange Commission starts with 14 pages of rocket and space photos – which makes sense if your goal is 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 decelerated to a mere 15.4%, while losses ballooned to $4.3 billion in just three months:
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)... global satellite Internet constellation Starlink... and xAI, which includes social network X (formerly known as Twitter) and generative-AI chatbot Grok. Here are the numbers for each segment:
As you can see in the table above, the company's gem is Starlink. It more than doubled its subscriber count from the first quarter of 2025 and is 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 segment, xAI, is dragging down these two great businesses. It's 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. That translates into a $108 billion valuation for the company.
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.
That's ridiculous!
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.
The shameful IPO horse race between SpaceX and OpenAI would be bad enough if the result were "merely" hundreds of billions of dollars in losses for reckless investors of these IPOs.
But the inevitable collapse of these shares will cause a far greater catastrophe for millions of investors who 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 figure out the details of this looming calamity. We're recording an emergency briefing to explain what we've 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 – so stay tuned to my daily e-mails.
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.