The Most Audacious IPO in History Is Launching Into a Bear Market

Here we are. The S&P 500 just closed its fifth consecutive week of losses — the longest downdraft since 2022. War effects are surfacing in hard economic data: PMIs falling across multiple countries, Eurozone consumer confidence dropping to its lowest level in years. Over the weekend, the Houthis entered the conflict, opening a new front on Red Sea shipping lanes just as the Strait of Hormuz sits at 95% closure. The CNN Fear & Greed Index is deep in extreme fear territory. Dumb Money Confidence is low. The Magnificent Seven era in public markets is officially over, with retail investors rotating into energy and industrials.

And into this environment, SpaceX is filing its IPO prospectus next week.

SpaceX is reported to target a $1.75 trillion valuation. With 2025 revenue of approximately $15 billion, that prices the company at 113 times annual sales. For context: Nvidia at peak AI hype traded around 25-30x. SpaceX at 113x is not being priced as a rocket company. It's being priced as something that has never existed before.

The pitch to investors, according to The Information, will focus on three themes: the launch business as a stable income driver, Starlink's fast-growing satellite internet revenue, and the long-term vision of orbital data centers. X and xAI will not play a major role in the investor presentation. 

If SpaceX raises the reported $75 billion through this IPO, it will surpass every dollar raised by every US IPO combined last year. OpenAI and Anthropic are queuing behind it for their own listings. Some argue these mega-IPOs will test the waters for other tech companies. More likely they will simply drain them. As the San Francisco Examiner put it: "It's going to be difficult for any other company to run a roadshow when everybody is going to be so intensely focused on these huge companies."

Smart Money / Dumb gap

In the non-retail secondary market, where we are currently working, SpaceX is currently ask-driven. Bid activity represents only 30% of market transactions, and the bid/ask spread sits at just 1%. In plain terms: there is no hype premium being paid.

Meanwhile, on some newish retail-facing apps offering pre-IPO exposure to SpaceX and similar private names, shares are sold at premiums of up to 100% above net asset value. 

Why Retail Investors Will Buy It Anyway

The tighter the economic environment becomes, the more powerful the "Lottery Ticket" becomes.

This is not a new phenomenon. It has a name in behavioral economics: escapism investing. When realistic financial futures look constrained — when bonds are losing value, inflation is eating returns, and the stock market is in its fifth consecutive losing week — the psychological appeal of a transformational bet increases rather than decreases. Lottery ticket sales go up during recessions, not down.

Musk understands this perfectly. Up to 30% of the SpaceX IPO is being allocated to retail investors — three times the typical Wall Street allocation. The structure is designed specifically to tap his fan base as a stabilizing force, betting that loyalists are less likely to sell immediately after listing than institutional traders chasing a quick pop.

Morningstar's Michael Field captured the sentiment bluntly: "The market is generally willing to pay up if the prize is big enough. SpaceX and OpenAI are huge prizes. The chance to get a piece of a game-changing technology will be too good to miss for many investors."

He's probably right. And that's precisely what makes it worth watching carefully.

The Terafab Wildcard

Last week, Musk added another layer.

He announced what he called "the most epic chip-building exercise in history by far." The project is Terafab: a joint venture between Tesla and SpaceX to consolidate chip design, fabrication, packaging, and testing under one roof — at a cost of $20-25 billion. The target output is staggering: 100-200 gigawatts of terrestrial computing annually, plus up to a terawatt of space-based compute for SpaceX's planned orbital data center satellites. For reference, the entire global semiconductor industry currently produces roughly 20 gigawatts of AI compute per year. Musk is proposing to build, from a single campus adjacent to Giga Texas in Austin, a facility that eventually produces many multiples of that.

Some skepticism is legitimate. Tesla has zero semiconductor manufacturing experience. Leading-edge fabs typically take three or more years and tens of billions to build. No construction timeline was given. The semiconductor industry has spent decades moving toward specialization for good reason — Nvidia designs, TSMC manufactures, ASML provides the tools. Vertical integration at this scale would mean betting that one company can overcome decades of accumulated specialized expertise.

Musk's own framing was characteristically unambiguous: "We either build the Terafab or we don't have the chips." He may be right about the underlying constraint. If Tesla genuinely wants 10 billion Optimus robots by 2040 and SpaceX wants a million AI satellites in orbit, chip supply stops being a procurement problem and starts being a fundamental ceiling on the entire vision. The question is whether a company filing an IPO next week can credibly promise to also build the world's largest semiconductor facility from scratch.

The Drama Ahead

What makes this moment genuinely unusual — beyond the scale, beyond the timing, beyond the valuation — is that even the basic rules haven't been written yet.

SpaceX will not use the standard six-month lockup period that typically prevents insiders from selling shares immediately after listing. With an estimated $10 billion raised across two decades of private funding, there are twenty years worth of investors and employees waiting for liquidity. The custom arrangement is still being sorted out. Nobody knows yet whether that means insiders will be allowed to sell earlier than normal — or forced to wait longer. The largest IPO in history is being launched with the exit terms still undecided.

We will be watching.