SpaceX IPO Analysis: Slowing Growth and Massive Losses Ahead
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Source: Fool
- Slowing Revenue Growth: In 2025, SpaceX's revenue increased by 33% to $18.67 billion, but in Q1 2026, it only grew 15% year-over-year to $4.69 billion, indicating a weakening growth momentum that could impact investor confidence.
- Profitability Dependent on Starlink: The Starlink segment accounted for 61% of revenue in 2025, and despite a drop in average revenue per user to $66, its subscriber base grew to 10.3 million, ensuring profitability; however, losses from other segments raise concerns about overall financial health.
- AI Business Continues to Bleed: SpaceX plans to ramp up AI infrastructure spending, yet X's advertising revenue declined by $100 million year-over-year, making the AI segment the company's weakest link and potentially straining future cash flows.
- IPO Valuation Risks: SpaceX aims to raise $75 billion with a valuation of up to $2 trillion, but a 107x sales multiple may lead to cautious investor sentiment, especially given the backdrop of slowing growth and increasing losses.
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Analyst Views on TSLA
Wall Street analysts forecast TSLA stock price to fall
30 Analyst Rating
12 Buy
11 Hold
7 Sell
Hold
Current: 426.010
Low
25.28
Averages
401.93
High
600.00
Current: 426.010
Low
25.28
Averages
401.93
High
600.00
About TSLA
Tesla, Inc. designs, develops, manufactures, sells and leases high-performance fully electric vehicles and energy generation and storage systems, and offers services related to its products. Its segments include automotive, and energy generation and storage. The automotive segment includes the design, development, manufacturing, sales and leasing of high-performance fully electric vehicles, and sales of automotive regulatory credits. It also includes sales of used vehicles, non-warranty maintenance services and collisions, part sales, paid supercharging, insurance services revenue and retail merchandise sales. The energy generation and storage segment include the design, manufacture, installation, sales and leasing of solar energy generation and energy storage products and related services and sales of solar energy systems incentives. Its consumer vehicles include the Model 3, Y, S, X and Cybertruck. Its lithium-ion battery energy storage products include Powerwall and Megapack.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Record IPO Size: SpaceX is set to debut on June 12, aiming to raise approximately $75 billion and achieve a valuation of $1.75 trillion, marking the largest IPO in history; however, its high valuation raises market concerns.
- Poor Financial Performance: SpaceX generated $18.67 billion in sales in 2025, but if valued at $1.75 trillion, it would have a price-to-sales ratio nearing 94, significantly exceeding sustainable industry levels, indicating a lack of growth potential.
- Competitive Pressure on xAI: SpaceX's AI subsidiary, xAI, is struggling against competitors like OpenAI, with first-quarter sales of $818 million reflecting only a 12.5% year-over-year growth, while rival Anthropic achieved triple-digit growth.
- Accounting Transparency Issues: SpaceX's financial statements exhibit accounting maneuvers, reporting $6.58 billion in adjusted EBITDA while recognizing a net loss of $4.94 billion, highlighting severe profitability concerns.
See More
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- Weak Sales Growth: Despite xAI's total addressable market of $26.5 trillion, its first-quarter revenue of $818 million reflects only a 12.5% year-over-year increase, indicating significant growth challenges in the highly competitive AI sector, which could impact investor sentiment.
- Poor Financial Health: SpaceX reported a net loss of $5 billion in 2025, and while it claimed a positive adjusted EBITDA of $6.58 billion, the substantial $8.65 billion gap due to depreciation and stock-based compensation raises serious questions about its profitability, likely affecting investor confidence.
- Partnership Risks: The $1.25 billion monthly compute partnership with Anthropic, while beneficial in the short term, can be terminated with just 90 days' notice, introducing revenue uncertainty that could negatively impact the IPO's performance and investor outlook.
See More
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- Staggering Market Potential: SpaceX's S1 filing estimates its total addressable market (TAM) at $28.5 trillion, labeled as the largest actionable market in human history, which, if accurate, strongly supports its $1.75 trillion IPO valuation.
- Diverse Revenue Streams: Starlink, as SpaceX's cash cow, generated $11.4 billion in revenue last year, accounting for about 60% of total revenue, highlighting its significance in future operations, although management believes xAI may hold greater long-term value.
- Capital Expenditure Raises Eyebrows: The $12.7 billion in capital expenditures incurred by xAI post-merger has caught analysts' attention, indicating SpaceX's substantial investment in AI and its strategic positioning for future business.
- Investor Confidence Challenge: While SpaceX's TAM figure has sparked market excitement, skepticism about its realizability persists, akin to challenges faced by Tesla, suggesting that future investor assessments of SpaceX will hinge on perceptions of its primary business direction.
See More
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- Historic IPO Plan: SpaceX is set to list on NASDAQ with a valuation of approximately $1.75 trillion, making it the largest IPO in history and instantly positioning it as the largest industrial company in the market, showcasing its leadership in the aerospace sector.
- Revenue Source Analysis: Starlink, as SpaceX's cash cow, generated $11.4 billion in revenue last year, accounting for about 60% of the company's total revenue, indicating its strong competitive position in the satellite internet market.
- Massive Market Potential: SpaceX's S1 filing reveals a total addressable market of $28.5 trillion, with $22.7 trillion related to enterprise applications, highlighting its long-term growth potential, particularly in the strategic xAI sector.
- Investor Confidence Challenge: Despite the enormous market potential, there is significant skepticism regarding the $28.5 trillion addressable market figure, and investors' perceptions of SpaceX's future business will directly impact its stock performance post-IPO.
See More
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- Lack of Real-World Use: Despite being promoted by Tesla CEO Elon Musk on social media, Dogecoin's lack of legitimate use cases limits its ability to attract stable demand, with only 2,222 merchants worldwide accepting it as payment, hindering its potential as a payment mechanism.
- Unlimited Supply Issue: Dogecoin's supply is limitless, with 5 billion new tokens mined annually, which could lead to long-term value depreciation, leaving investors disappointed compared to Bitcoin's capped supply of 21 million coins.
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