Valuation guru Aswath Damodaran's recent statement that SpaceX is "too expensive" and that he "wouldn't buy a single share" is more than just one expert's opinion; it's the culmination of several weeks of intense market activity and financial disclosures.
At the heart of this assessment are two key factors. First is the valuation gap. SpaceX went public with a market cap of around $1.77 trillion, but the price quickly surged to as high as $2.6 trillion in its first week. The question is whether this price is justified by the company's actual performance. According to its IPO prospectus, SpaceX is in a phase of 'high growth, high investment.' It posted revenues of $18.67 billion in 2025 but also a net loss of $4.94 billion. While its Starlink service is growing rapidly with 10.3 million subscribers, the massive investments in areas like its 1.0GW AI data center mean profitability is still a distant goal. When a stock's price runs too far ahead of its financial reality, a conclusion like "too expensive" is a natural one for a value investor.
Let's quantify this overvaluation with a key metric: the Price-to-Sales (P/S) ratio. Based on its recent performance, SpaceX's P/S ratio was about 91.6x at its IPO price and soared to a staggering 134.7x at its peak. To put that in perspective, at the same time, Nvidia's P/S ratio was around 20x, Tesla's was about 15x, and Apple's was near 10x. This stark difference shows the immense premium investors were willing to pay for SpaceX's future narrative, a premium that Damodaran believes is disconnected from its intrinsic value.
The second factor is market sentiment and timing. The SpaceX IPO occurred during a global AI and semiconductor rally that fueled a strong 'Fear Of Missing Out' (FOMO) among investors. Markets were volatile, with indices like South Korea's KOSPI hitting all-time highs and then sharply falling, sending mixed signals of both euphoria and bubble warnings. In such a heated environment, investors are more likely to listen to voices of caution that emphasize fundamental value over hype.
So, why did this statement gain so much traction now? The sequence of events is crucial. First, the IPO prospectus was released on June 5th, providing concrete numbers for everyone to analyze. Second, the IPO on June 12th, framed as the 'biggest IPO ever,' set expectations sky-high. Third, the stock's immediate surge to $2.6 trillion in the following days created a clear and dramatic price-value discrepancy. This combination of hard data and extreme price action made Damodaran's cautionary message perfectly timed and highly resonant.
In essence, Damodaran's stance is a principled one against buying into a narrative when the price has detached so far from the underlying numbers. It serves as a powerful reminder that even for a revolutionary company like SpaceX, the laws of valuation still apply.
- P/S Ratio (Price-to-Sales Ratio): A valuation metric that compares a company's stock price to its revenues. A high P/S ratio suggests that investors are willing to pay a high price for each dollar of sales, often because they expect high future growth.
- ARPU (Average Revenue Per User): A metric that shows how much revenue a company generates from an individual user, on average. It's commonly used for subscription-based businesses like Starlink.
- IPO (Initial Public Offering): The process through which a private company becomes a public one by selling its shares to the public for the first time.