None of this was good news, but the numbers were broadly priced in, and could’ve given some relief to investors hadn’t the Middle East tensions escalated to send oil prices 3% higher, and inflation expectations along with them.

The S&P 500 fell 1.62%, Nasdaq 100 tanked 2%, with technology leading losses at a moment the bubble fears hit the peak, and just before the biggest IPO of all times!

Count down to the SpaceX IPO

Now, the world's attention will be shifting toward what could become the biggest IPO in history. SpaceX is set to be priced today and is expected to make its stock market debut tomorrow, June 12, at a valuation approaching $1.8 trillion — making it one of the world's most valuable companies from day one.

Demand is reportedly strong, the IPO is oversubscribed more than 4 times and some major index providers are preparing to include the stock shortly after listing. Note that the S&P refused to include SpaceX in its indices before a year has passed – which is extremely reassuring to me, in a way, as it suggests that the S&P cares more about the long-term quality of its index than short-term hype. Others, like Nasdaq and Russell, will be jumping straight in.

As a result, and given the size of the IPO and appetite, demand will be there. But the real question for investors is whether the stock can live up to the hype.

Scenarios, scenarios...

There are two major possible scenarios.

The first is the "buy the space dream" scenario. In this scenario, investors take a chance on this futuristic company that gathers a portfolio of businesses, including already existing ones like satellite internet (Starlink), a social media platform (ex-Twitter), an AI model (Grok) and AI infrastructure (following the integration of xAI), but more excitingly, a not-yet-existing one: space AI infrastructure, orbital data centrals, etc..

In this bullish scenario, SpaceX stock could surge after listing and eventually pull the entire space ecosystem higher.

But that sounds a bit too rosy.

Note that many investors have already taken a chance through listed space and defence names. Stocks such as Rocket Lab (RKLB), Redwire (RDW), AST SpaceMobile (ASTS), Intuitive Machines (LUNR), and Voyager Technologies (VOYG) have enjoyed strong speculative flows as investors searched for the next SpaceX proxy. We have seen a certain pullback since the beginning of the month, but many are still meaningfully up compared to the same time last year.

So their valuations today make the second scenario more likely: "buy the rumour, sell the fact."

Because existing space shares have already benefited from the pre-SpaceX hype and are richly valued, they could suffer from capital rotating to the new giant even if everything goes well for SpaceX – and maybe especially if things go well. And the selloff could extend beyond the space industry into other pockets of the tech market that have gone parabolic in recent months: I am looking at you chipmakers.

Why? Because, at a valuation approaching $1.8 trillion and a fundraising target of roughly $75 billion, the SpaceX IPO will likely create a significant liquidity vacuum. To absorb that amount of supply, investors – both institutional and retail – may have to sell existing holdings to free cash for SpaceX allocations. This could partly explain the recent selloff across chipmakers, for example, although part of the decline can also be attributed to economic data supporting a hawkish Federal Reserve (Fed) stance and the sheer magnitude of the recent rally.

If that happens, if investors rotate cash from existing tech holdings into SpaceX, many of the names that have rallied the hardest ahead of the IPO could experience significant profit-taking, potentially triggering a short-lived frenzy around SpaceX, whether we are talking about space shares or other technology holdings.

Then, once the initial shock is behind us, say in a few months, if SpaceX performs well and survives the initial hype, and if the company convinces investors that its space business can generate revenue within a reasonable timeframe, other space companies could also benefit from the improved business outlook. Space could become the next big thing.

Or enthusiasm would fade and investors find another, and ideally a more reasonable dream.

Buy or Sell?

Unsurprisingly, opinions diverge on something this science-fiction-worthy. Retail traders chasing the next great wave love the speculative potential behind the SpaceX IPO, institutions are reportedly oversubscribed, but some remain sceptical. A Danish pension fund said it will not take a chance on SpaceX because it is "grossly valued" and has a "catastrophic governance structure" – referring to Elon Musk's 85% voting rights. Morningstar, meanwhile, values the company at less than half of what Elon Musk believes it is worth.

Looking at the numbers, as much as we can find them, at the current valuation SpaceX appears to be worth almost 100 times last year's sales. This valuation is based on what SpaceX could become in ten years' time – a somewhat stretched assumption that does not fully account for the speed at which the company burns cash due to the enormous cost of building data centres in space. On the other hand, the latest contract announcements are so big that there is potential for important revenue upgrade. (I am referring to Google’s nearly $1bn per month (!) agreement to access xAI’s data centers).

So, my base case is that SpaceX enjoys a strong debut. The combination of Elon Musk, AI, Starlink, space exploration and index inclusion is simply too powerful to ignore.

Then, major index providers such as Nasdaq and Russell will include SpaceX in their indices. Intropic predicts that about 30% of SpaceX's free float could eventually be owned by passive investors through these indices. This would insure a certain demand and could support bullish price action.

But the valuation is certainly eye-watering for a business that has yet to exist and turn profitable in an extraterrestrial setting. Therefore, at the end of the day, and in light of the latest developments, the company could eventually be valued less as a space company and more as a next-generation AI infrastructure giant.

In that case, its name will continue to reflect the dream of a faraway future, but its valuation may become much less stellar.