Nick Hilden
Last week, Elon Musk’s SpaceX released its IPO prospectus in preparation for going public in June, and now that experts have had a chance to pore through its 277 pages, one analyst has bad news for interested investors: the company is a “trainwreck.”
This is according to Ed Elson, a prominent financial and tech analyst who is particularly well known among Gen-Z, who posted on Tuesday, “I read all 277 pages of SpaceX's IPO filing so you don't have to.” His nutshell assessment was not optimistic: “Losses up 700 percent. Revenue decelerating. 107x price-to-sales multiple. It's a trainwreck.” When you dig into its claims, he says, it’s “unserious, empty, hallucinatory, and borderline dishonest.”
Elson says that the fantastical elements of the filing are clear from the start.
“After eighteen images of rockets in space, we learn that the company’s mission is ‘to extend the light of consciousness to the stars,’” writes Elson. “To accomplish this, the company plans to advance humanity ‘to Kardashev Type II status,’ which is defined in the document as ‘a civilization that harnesses the full energy output of its local star.’ Only a few pages in and it’s already starting to feel like an ayahuasca trip.”
This “psychedelic language,” notes Elson, is peppered throughout the pitch, with “The light of consciousness” mentioned ten different times, “human augmentation” mentioned eleven times, and “first principles” twenty-seven times. “AI gets a mind-boggling 1,251 mentions — more features than the word ‘Jesus’ gets in the Bible.”
“Once you arrive at the financials,” he says, “you start to realize what the language is overcompensating for: awful numbers. The company generated $4.7 billion in Q1 2026, up only 15 percent from the year before (very low for an ‘AI company’). It also lost $4.3 billion, up 700 percent from the year before. That means the company is spending roughly twice as much as it makes (and on pace to explode those losses even more), while growing its topline six times slower than Nvidia and two times slower than my own podcast. There’s no getting around it — these numbers are terrible.”
The numbers look even worse when you compare them to 2025. The company’s revenue grew by 33 percent last year, meaning its business is actually decelerating.
“Meanwhile,” notes Elson, “net losses came in at $4.9 billion, so the company is on track to lose four times more money than it did last year. I’ll put it simply: slowing revenue + skyrocketing expenses = not good.”
All of this is even more farcical in the context of the company’s $2 trillion valuation, which Elson says does not reflect the actual financials. The stock will be priced at 107 times sales, making it one of the most expensive ever. As Elson notes, “It will be twice as valuable than Walmart while generating less revenue than Macy’s,” and when compared against other tech megacompanies that went public, the SpaceX valuation is “insane.” As Elson explains, “Meta went public at 28 times sales with 88 percent revenue growth. Google went public at 10 times sales with 234 percent growth. Put another way, SpaceX is growing seven times slower while asking for a multiple ten times higher.”
According to Elson, a closer analysis of the company’s actual position places its valuation closer to $500 billion. Still a lot, but still 75 percent less than the suggested number.
Other experts have raised their own concerns about the company’s IPO. According to the New York Times, SpaceX appears to be structured in a way that favors owner Elon Musk “at the expense of other shareholders.” And Barron’s warns that stock shoppers should invest at their “own risk,” noting that these types of high-profile IPOs tend to “underperform” and deliver "volatility" resulting in “negative returns."
Musk — who donated at $288 million to elect President Donald Trump — has faced accusations that his appointment as a “special government employee” at the head of DOGE allowed him to act with conflicts of interest regarding SpaceX’s government contracts. Government watchdogs note that since taking office, more and more of NASA’s funding has been diverted to Musk’s company.
Now, Musk is inviting the public to buy into that company, which Elson warns is more fantasy than business.
“The only way to get yourself mentally to $2 trillion is to believe that every possible sci-fi objective will be achieved, from data centers in space to asteroid mining to building cities on Mars,” he concludes. “Once you’ve done that, you then have to convince yourself that each of those endeavors will also make money. There’s optimism, and then there’s delusion.”
Wall Street Says That a Company That Loses Billions is Worth Trillions
Photograph Source: Alexander Hatley – CC BY 2.0
On Wednesday, the Washington Post ran a short piece with the headline, “Musk’s SpaceX Discloses Massive Losses Ahead of Expected Record-Breaking IPO.” The first sentence told readers:
SpaceX, the rocket company led by Elon Musk set to debut on the stock market in coming weeks, has recorded $13 billion worth of losses since the beginning of 2023, according to a financial filing made public Wednesday by the Securities and Exchange Commission.
Later in the article, we learn that the implied market capitalization, based on the SpaceX IPO, is $1 trillion. Maybe it’s old-fashioned, but when I learned economics, a stock’s price was supposed to be related to its profits. A company that loses $13 billion would not ordinarily warrant a market capitalization in the trillions.
Of course, this is the same story with Musk’s other big company, Tesla. It has a market capitalization of almost $1.6 trillion, nearly 400 times its $4 billion earnings. I suppose its stock price is a bet on Tesla’s earnings growth, but that doesn’t seem very promising with the company rapidly losing market share to Chinese competitors.
Furthermore, almost 80 percent of the earnings Tesla does have is coming from carbon credits it gets as part of what his friend Donald Trump calls “the green scam.” Tesla’s money train, even at 1/400th of its share price, may not be long-lived if Trump gets his say, so its profit growth looks to be headed in the wrong direction.
But Musk gave us a bit more guidance in the registration statement for SpaceX’s IPO. According to the WaPo article:
In its registration statement, SpaceX estimated its total addressable market — the ceiling for its business ambitions — at $28.5 trillion, an amount nearly equal to the gross domestic product of the United States.
All but $2 trillion of that opportunity comes from AI services, SpaceX’s filing said.
This means Musk is betting on getting a substantial portion of a $27 trillion annual market, 90 percent of current US GDP from his AI.
Since Musk provides no time-horizon for this projection, it’s not clear whether this is projected as an annual figure at some future point, 10, 20, or 30 years out, or perhaps even a cumulative total over this indeterminate time period. But hey, we’re just talking about a trillion-dollar stock valuation, why nickel and dime the projections?
When it comes to big boasts on future AI sales, it is probably worth noting that Musk and his Silicon Valley buddies don’t appear to be doing so well today. Chinese AI makers are beating them in sales in the rest of the world and seem to be gaining ground even in Silicon Valley.
Apparently, Airbnb is going with Chinese AI over the domestically produced stuff. The US stuff sells for five to ten times as much as what the Chinese producers charge. It’s like having the option of buying a car for $4,000 rather than $40,000. You need a pretty good story to get people to go with the $40,000 car. The market (the AI buyers’ market, not the stock market) doesn’t seem to think the Silicon Valley boys have the story.
Anyhow, it seems pretty clear that the valuation of SpaceX is really nothing more than a vote of confidence that Elon Musk will turn it into an incredibly profitable company at some time in the not-too- distant future, or at least a bet that other investors will believe that Elon Musk will turn it into an incredibly profitable company at some time in the not-too-distant future.
I have not followed Musk’s business career closely but Grok did tell me that in 2015 he promised Tesla would have full self-driving cars in two years. I did pay more attention to what Musk said about politics and government finances, especially around the time he was running DOGE. And here I can say with great confidence that Musk was not just a little bit wrong; the things he was saying were batshit crazy.
Musk repeatedly claimed that there was at least $2 trillion in waste in the federal government budget. This would put the amount of waste at more than a quarter of the budget. Since almost three-quarters of the $7 trillion budget goes to Social Security, Medicare, the military, and interest on the debt — programs Musk’s boss said he didn’t want to touch — it was pretty hard to claim there was $2 trillion in waste.
But these numbers did not stop Elon Musk. He suggested that he might give us all a $5,000 DOGE dividend check, a sum that would come to $1.3 trillion if it went to every adult in the country. Oh yeah, he also said that DOGE could balance the budget, eliminating a $1.7 trillion deficit.
Musk made other absurd claims. He said there were 20 million dead people getting Social Security checks, apparently misunderstanding the program’s procedures. Perhaps even more disturbing, even when people who understood the program explained Musk’s mistake, he never corrected himself.
Returning to SpaceX’s IPO, we’re looking at a company that loses billions of dollars. It is run entirely by a person who routinely makes promises that he can’t make good on and says things about the world that are totally crazy. That doesn’t sound like a trillion-dollar company to me, but what do I know about business?
This first appeared on Dean Baker’s Beat the Press blog.
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