June 2026
IN THIS ISSUE
Structure matters
Reliable sources
No Strikes in the Space Race
Is it possible to write a monthly investing newsletter and NOT discuss this month’s SpaceX IPO??!!!
Asking "Should I buy SpaceX?" is a fine question for IPO speculators, but I think it’s better to ask: "Is buying SpaceX the best allocation of capital right now?"
Elon’s vision and historical track record of disruption certainly offers significant upside potential. But how much upside is needed to justify the IPO’s opening price?
Aswath Damodaran, the New York University finance professor known as the "dean of valuation," reviewed the SpaceX prospectus and pegged the company’s valuation at $1.3 trillion reflecting an opening price of $100 per share, well below the IPO’s opening price of $150 per share.
But okay, fine, markets work because people disagree about prices! So is SpaceX overvalued then?
A disciplined investment process requires looking critically at and beyond the roadshow hype that drives high-profile IPOs like this one. SpaceX has a very high valuation by virtually any measure:
Price to trailing sales: In 2025, $18.7 billion in sales against valuation of $1.77 trillion for a ratio of roughly 95x.
Price to forward sales: Projected for 2026, a better but still very high ratio of 54x.
Price to trailing earnings: undefined - With $4.94 billion in losses for 2025, the lack of profitability means a zero denominator and renders standard P/E ratios useless.
Price to forward earnings: undefined - make whatever future profitability assumptions at your own risk!
Safe to say, few investors are buying the IPO for its valuation - the narrative seems much more about buying Elon’s vision as the “Edison of our time” (per Jamie Dimon in the SpaceX roadshow) and the nascent space industry’s growth potential.
One significant risk for SpaceX investors is that the retail hype, lock-ups, and other structural factors create downside risk of a price collapse. I do not write this newsletter mid-month, I do not make price forecasts, and my investment strategy does not involve individual stock-picking… so I get to watch from afar with the benefit of hindsight. It’s still too early to make a long-term judgment of course, but “Just 10 days after the company’s blockbuster IPO, buyers of its initial public shares are in the red.” (SpaceX stock tumbles 23% from its high, as average investor sees gains wiped out).
So let’s remember Warren Buffett’s metaphor that investing is a "no called strikes" game. We do not have to swing at every IPO. We can let as many pitches (buying decisions) go by until we get a "really juicy pitch" with a much more favorable risk-reward profile. That juicy pitch might be SpaceX at some future time. That juicy pitch might never come from SpaceX. We do not have to take a position at all, so in the absence of a strong conviction play, let’s stay patient, stay objective, and stay opportunistic.
ONE MORE THING…
Structure matters. Bill Ackman has been immensely successful as a fund manager, but his recent pivots to new fund structures show that even for a world-class manager, investors still demand investor-friendly fund structures. Bill Ackman’s Main Fund Is Feeling the Pain. So Is His New One (Barrons).
Reliable sources. “Trust in official economic statistics has become an increasingly salient policy issue, including in the US where the Commissioner of the Bureau of Labor Statistics was dismissed in August 2025 amid allegations that agency data had been manipulated. This column shows that the events produced a sharp increase in economic policy uncertainty, with existing estimates linking uncertainty to macroeconomic outcomes implying that the resulting loss of confidence may have reduced US GDP by roughly $20 billion. While some economic activity postponed during periods of uncertainty may eventually occur later, there are reasons to believe that at least part of the effect could be lasting.” When trust in official statistics declines | CEPR
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