The SpaceX IPO needs a bright red hype warning

Thursday, 11 June 2026

Frances Cook is a freelance journalist who podcasts and writes about personal finance. This is an extract from her investing newsletter, The Market Memo.

OPINION: Cards on the table. I’ve been a Musk hater since before it was cool.

I’ve always thought he was overhyped, said cringey things, and had a habit of making grand promises that he didn’t deliver on.

But I’m also a solid believer in letting people invest their money in the ways that matter for them. And if something is a possibility to help normal people get ahead, I can usually be won over.

So, with my declaration of bias aside, I’ve been watching the upcoming SpaceX IPO with a lot of interest.

As usual with anything Musk, it’s getting a lot of hype, and a lot of interest.

And it’s working differently from normal in a few key ways.

It could be the biggest ever IPO, targeting a valuation of US$2 trillion. Some say overvalued, others say future-focused, po-tay-to po-tah-to.

But another key difference is how it’s open to the little guys, you and me, in a fairly unprecedented way.

What is an IPO, anyway?

The sharemarket just lets you become a business owner, without actually running the business every day.

And an IPO, well, it’s is the first step in that process.

IPO stands for Initial Public Offering. It’s when the public, you and me, are given the chance to own a bit of that company for the first time.

Smart people come in, value the company, say what price they should put on the shares. Then it goes out to the market, and you find out whether people will actually buy or sell at that price.

When you look at it this way, there is actually two different prices in the mix for an IPO.

When people sign up for a normal IPO, there’s the offering price.

That’s the price set for those who sign up for those very first shares. They sign up to the IPO before it hits the market, at a set price, from those valuers.

They pay, and from the listing day, those shares are theirs. Those shares can then be resold on the regular sharemarket, like any other stock.

Which is why we have the offering price, and then the opening price.

The opening price is what everyone else will pay once the shares hit the sharemarket for real.

They can buy and sell from other investors, and we get that moment of the “market deciding” what those shares are truly worth, based on how much people are competing for them.

So who gets the offering price? It’s often only available to certain investors. And it’s usually the Big Boys.

I’m talking big funds, banks, pension managers. For the average IPO, 90% of the shares go to those Big Boys.

Retail investors, that’s you or me with our apps, might have 10% of those IPO shares set aside for us, that we can sign up to get at offering price.

If you want more, well, you’ll have to duke it out once it hits the open sharemarket.

This time, though? SpaceX is doing something a little different.

On the face of it, it looks like a real “man of the people” moment. Underneath, I think it’s a pretty cynical play for more money.

Real Big For Retail

To be fair, in a genuine break from tradition, SpaceX is offering retail investors triple the usual amount of shares.

Instead of 10%, retail investors are able to buy up to 30% of the offering.

Those shares are being sold directly through places like Robinhood, Fidelity, and Charles Schwab, at the same time as the big institutional players get their shot, and for the same IPO price.

My first thought? Love to see it.

My second thought? When I compare this to Musk’s other company, and how Tesla stock performs, it starts to feel less generous.

Because Musk didn’t get to be the world’s richest man by being naive about what motivates people.

The Tesla Tussle

Tesla is widely considered overhyped, and overvalued.

That’s not me and my bias speaking, not this time at least.

Typically they say a good price to earnings ratio is around 20 to 25, which is where you look at how much it costs to buy a share, versus how much you are likely to earn from it.

Tesla? Ah, at the time of writing, their price to earnings is 390. Over the last ten years, they’ve averaged 160.

That is not normal. Very not normal. You’re paying in way higher than what you get back.

So, yes, I’m confident in calling them overvalued, no matter how much people might be interested in the company and its future potential.

What’s propping up this very high share price? Retail investors.

The man, the myth, the legend, keeps them investing. Musk has a dedicated fan base, who believe in what he’s selling, and that he’s a visionary that sees things other people don’t.

I certainly don’t see him that way, but to each their own.

Meanwhile, the institutional investors have been heading for the exits for a long time now.

The big companies, with their teams of analysts, have been ditching Tesla in big numbers.

UBS Asset Management cut its Tesla stake by about 74%. Nomura reduced its position by more than 80%. Goldman Sachs and Morgan Stanley both cut down their investments.

Retail is piling in. Institutions are walking out.

So Musk knows who his most loyal buyers are. And when he’s looking to make big bang for his buck on IPO, he wants to get the best result possible.

Offering retail investors a bigger slice of the SpaceX IPO, at the same price as the big players?

That’s not necessarily generosity. It’s strategy, and knowing your audience.

Whether or not you should buy it?

That one’s up to you.

Just make sure you read between the hype first.

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