The SpaceX initial public offering (“IPO”) is expected to be the largest IPO of all time, with the company targeting a market capitalization of $1.75 trillion, according to the Financial Times. Despite the massive valuation and huge anticipation for the company’s public debut, there are a few under-the-radar details about the IPO that should chill investors looking to participate in the Elon Musk-helmed company.
The Financial Times reported that SpaceX is looking to raise $75 billion from the offering, up recently from a target of $50 billion, as executives look to haul in more cash at the company’s highest valuation of all time. This plan would mean less than 5% of the stock would be floated in the market as part of the offering.
SpaceX is reportedly targeting a June IPO, though it has yet to file a prospectus with the Securities and Exchange Commission. Analysts expect it could be filed in early April, however. With just two months or so until the start of June, SpaceX is on a tight timeline to hit that target.
A SpaceX debut is one of the hottest potential IPOs of 2026, and it looks even closer to becoming reality. If it happens, SpaceX would also instantly become one of the market’s most valuable companies.
A SpaceX IPO would also likely propel Musk to become the world’s first trillionaire.
To call SpaceX’s business plans bold might be an understatement. It’s something of an omnibus of different firms and projects tied together by the glue of Musk’s ambitions:
- A space company, developing and launching rockets, among many other projects
- Starlink, a satellite-based internet service and the real profit engine
- xAI, a roll-up of social media platform X and Grok, acquired in February 2026
Beyond these elements, Musk has touted any number of other SpaceX projects, including AI data centers in space, a lunar outpost, and a now-postponed plan to travel to Mars.
What are investors being asked to pay for Musk’s ambitions at that $1.75 trillion valuation? Around 110 times the company’s sales, according to Bloomberg. Incredibly, some analysts are justifying the valuation on their projections of the company’s sales in 10 or 15 years.
It’s all heady stuff, but new details on SpaceX’s IPO plans should give investors serious pause. It’s not that any individual detail alone is so worrisome. Call them more a series of “yellow flags.”
But put them all together and they form a red flag – particularly in the context of the company’s truly breathtaking valuation. Here’s what investors should be watching in SpaceX’s IPO filing.
3 ‘Yellow Flags’ to Watch in the SpaceX IPO
Recent details have emerged about the SpaceX IPO, and they’re the kind of data points that show what insiders and underwriters really think about the offering. In sum, they’re expecting the IPO to be hot enough that they can force through several conditions that are highly unfavorable to shareholders.
1. SpaceX’s Lock-Up Rules Could Create a Conflict of Interest
When a company goes public, insiders typically are prevented from selling their shares for a predetermined period of time, known as a lock-up period. The bankers underwriting the SpaceX IPO are considering skipping this lock-up period entirely, according to the Financial Times:
Bankers involved are toying with the idea of allowing existing shareholders to sell out of their positions on day one… That would do away with rules to prevent insiders cashing out or trading shares, which are typically imposed for 180 days after a company goes public.
A lock-up period helps mitigate the conflict of interest that exists between insiders – those who know a company best and yet have decided to sell it to the public – and outside investors.
A lock-up period helps prevent, among other things, a “pump-and-dump” scheme, where insiders artificially hype a stock to the moon and then cash out while expectations and hype are high. A pump-and-dump typically occurs with a thinly traded stock.
The Financial Times also suggests that underwriters are considering a staggered lock-up in which tranches of shares are available for sale “over the course of a few months.”
The recently falling stock market and the stock’s aggressive IPO valuation may be driving some of the desire to change the typical lock-up rules, allowing insiders to cash in on shares sooner.
MORE: Elon Musk Wants SpaceX to Beat ‘Everyone Else Combined’ in AI
2. Retail Investors May Get a Bigger Bite of the SpaceX IPO
How often does someone hand out free money to you? If “never” is approximately your answer, then you might be concerned about SpaceX insiders massively upsizing the amount that retail investors – read: not the fabulously wealthy – can purchase in the stock offering.
According to Reuters, retail investors may get up to 30% of the IPO float – simply huge. Advisors had previously expected the figure to be 20%, but that grew as execs upsized the capital raise.
Typically, institutional investors and other well-connected investors get the lion’s share of an offering. The scraps left for individual investors in the usual IPO are perhaps 5% or 10%.
Is there a potentially good reason for this extra portion for retail investors? Yes.
The most important reason is that SpaceX is looking to sell an unprecedented amount of stock ($75 billion) and become the largest IPO of all time. That’s a big deal to take down. The company needs retail investors to help raise that massive amount of cash and make the IPO look like a success.
At the same time, you must be cautious when anyone cuts you in for a “can’t miss” deal normally reserved for the elite. If it’s such a great opportunity, then why are you being invited to profit, too?
As the saying goes, “If you look around the table and can’t figure out who the sucker is, it’s you.”
3. SpaceX’s Dual Share Classes Keep Musk Firmly in Control
Musk owned about 42% of the stock, and the private company’s dual share class structure gives him about 80% of the vote before the acquisition of xAI, according to Federal Communications Commission reports. The super-voting shares mean he maintains massive controlling interest in SpaceX.
However, the IPO will push Musk’s proportional ownership of SpaceX lower, as more shares go to outside investors. So, the company is considering a governance plan that provides Musk and other insiders with more voting power, according to Bloomberg.
The exact structure is unclear, but setups like dual share classes entrench insiders to the detriment of good governance. Still, they’ve become more popular in recent years as some hot tech stocks went public, including Lyft (LYFT), Spotify Technology (SPOT), and Meta Platforms (META).
With dual share classes, insiders are asking for outsiders’ money with only the thinnest pretense of caring about outsiders’ interests. This misalignment can go radically wrong.
Understandably, then, outside investors tend to price stocks with such structures at a lower valuation. This result is completely rational. If a company’s board and top executives are less responsive to the concerns of outside investors, they’re more apt to make decisions in their own self-interest.
Investors have already encountered massive self-dealing at Tesla, where Musk and the board have granted the CEO a pay package that could be worth $1 trillion if certain performance milestones are met.
We’ve also seen Musk break promise after promise in an organization (Tesla) that doesn’t have dual share classes. Will he become even less responsive to investors in a governance structure that leaves outsiders with virtually no sway on management?
MORE: How Elon Musk Is Juicing SpaceX’s Valuation
Why Is SpaceX Going Public?
The three concerns above are problematic on their own, but put them together with a valuation that is (fittingly) astronomical, and you start to see a fact pattern that looks unfavorable to investors.
But what does SpaceX and Elon Musk get out of going public – and why do it at all? The reasons range from the financial and operational to the utterly personal:
- The market is strong (but fading): Companies want to go public when the market is hot and receptive to an IPO, as it is now. They get higher valuations and the luster of success if the IPO “pops” on its first day. A recently fading market due to the Iran war and soaring oil prices may add extra urgency to get an IPO done while it’s still possible.
- The company’s valuation is at an all-time high: Elon Musk has talked up SpaceX’s valuation, now sitting at $1.25 trillion before the offering. A strong debut provides a lot of money for the company at a high valuation – good for SpaceX’s war chest.
- To raise capital for expansion: SpaceX has plenty of uses for its money: Fund AI investments such as Terafab, further investments in its Starship unit, investments in the profit center Starlink, and pie-in-the-sky dreams such as a lunar outpost.
- To pay for xAI and Grok: The February merger with xAI – which owns AI company Grok – helped lift SpaceX’s valuation. But xAI is spending money at a furious rate, $7.8 billion in the first three quarters of 2025, and generating quarterly losses, according to Bloomberg. More cash from an IPO helps fund further investment here and eases worries about xAI’s debt load, including $17.5 billion tied to either X (formerly Twitter) and xAI.
- To stroke Elon Musk’s ego and make him a trillionaire: With a successful debut at the scale he’s talking about, Musk can claim bragging rights for the largest IPO ever and possibly becoming the world’s first trillionaire. With a new SpaceX stock currency, Musk could stroke his ego further with a subsequent merger with Tesla, likely making the combined company the world’s largest by market cap (and therefore subject to SpaceX’s corporate governance).
Whether the SpaceX IPO becomes a long-term winner will be answered in the fullness of time. But the series of yellow flags and high valuation create an unfavorable setup for investors today.
But investors’ infatuation with Musk shows that in the short term, they’re willing to buy whatever he’s selling. And that may mean a booming debut for the SpaceX IPO.
