One analyst calls SpaceX’s IPO filing ‘unserious, empty, hallucinatory, and borderline dishonest’

Ed Elson, a prominent tech analyst widely followed by Gen Z, has declared Elon Musk’s SpaceX a “trainwreck” ahead of its initial public offering.

Elson, who co-hosts the Prof G Markets podcast with entrepreneur Scott Galloway, made the determination after reading through the firm’s 277-page S-1 filing. He didn’t hold back in a Substack post, calling the filing “unserious, empty, hallucinatory, and borderline dishonest.”

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The problems start early, he writes, with “psychedelic” language such as SpaceX’s mission: “to extend the light of consciousness to the stars.”

Other phrases that pop up repeatedly are “human augmentation” (11 times) and, natch, AI (1,251 mentions — more often than the name “Jesus” appears in the Bible, Elson notes).

Less-than-stellar financials

Elson’s bigger concern, though, is with the financials. SpaceX, he says, is spending roughly twice as much as it makes — on pace to lose four times as much this year as last, when it experienced $4.9 billion in net losses.

He added that the firm’s revenue — up 15% year over year — is low for a business that presents itself as an AI company.

“There’s no getting around it — these numbers are terrible,” he wrote. “I’ll put it simply: slowing revenue + skyrocketing expenses = not good.”

Less-than-stellar financials aren’t unheard in an IPO. But with SpaceX’s numbers, Elson says, the valuation of the company defies any sort of logic.

“The stock is set to be priced at 107 times sales, which would make it one of the most expensive stocks in history,” he writes. “It will be twice as valuable (as) Walmart while generating less revenue than Macy’s.”

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To put that in perspective, here are relative values of Big Tech IPO stock prices to sales, historically:

Google and Apple: stocks valued at 10 times sales.

Meta: stocks valued at 28 times sales (seen as massive when first offered).

SpaceX: stocks valued at 107 times sales.

AI unit drives SpaceX ‘off the rails’

Elson called SpaceX’s AI unit, xAI, a “sinkhole” and a “#MoneyFurnace” that lost $2.5 billion last year and had quarterly capital expenditures of $7.7 billion.

So why did SpaceX acquire xAI, knowing how bad the numbers would be?

Elson says it was so the company could present itself as an “AI company” as well as a “space company,” boosting its total addressable market to an estimated $28.5 trillion (more than the GDP of Europe or China).

“AI is where this business comes off the rails,” he wrote. “The only way to get yourself mentally to $2 trillion is to believe that every possible sci-fi objective will be achieved, from data centers in space to asteroid mining to building cities on Mars.

“Once you’ve done that, you then have to convince yourself that each of those endeavors will also make money. There’s optimism, and then there’s delusion.”

That might be why 30% of the shares are being reserved for retail investors. SpaceX seems to be counting on Musk’s cult of personality to buy shares, but a wider group, who might normally avoid the stock, could be swept in as well, thanks to the ‘fast entry’ deal Musk negotiated that automatically includes SpaceX in the Nasdaq blue-chip index.

“Billions of dollars of passive money will automatically flow into the company as soon as it lists,” he wrote. “In other words, if you own the Nasdaq, you’re about to own SpaceX.”

Moneywise reached out to SpaceX for comment and received no response as of publication.

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This article originally appeared on Moneywise.com under the title: One analyst calls SpaceX’s IPO filing ‘unserious, empty, hallucinatory, and borderline dishonest’

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