By Ian Wenik
LA JOLLA, Calif. — Friday’s $75bn initial public offering (IPO) of space exploration company SpaceX, expected to be the largest IPO in history, has been met with unprecedented investor enthusiasm.
Recent reporting from general interest business news outlets such as Bloomberg and Reuters has pegged the IPO as roughly four times oversubscribed. A Thursday report from the Wall Street Journal indicated BlackRock, the world’s largest asset manager, had submitted a $5bn order for SpaceX shares.
But the euphoria hasn’t quite trickled down to the top investment decisionmakers at independent RIAs.
In a Tuesday panel discussion at Citywire’s San Diego CIO Summit, several RIA CIOs displayed tepid enthusiasm — at best — for the IPO.
‘We don’t do IPOs. It’s just kind of simple,’ said David Harden, the chief executive and CIO at $3bn Summit Global Investments. ‘We do have clients that want to participate. We give them all the data about the risk that happens with IPOs and volatility of the day on the IPO when it becomes public, etc. etc.’
‘Most people that are going to make money in SpaceX are probably already in SpaceX and that’s just the reality of that.’
The executives on stage Tuesday found it difficult to reconcile the valuations tied to companies like SpaceX with traditional investing principles. For example, SpaceX’s IPO assigns the company a roughly 94x multiple of its sales, despite it losing roughly $5bn in the 2025 fiscal year.
For context, the strongest valuations for RIAs — which generate steady and predictable free cash flow — top out at roughly 24x-25x their earnings.
‘We’ve got trillion-dollar companies coming to market with valuations and rationale that is based on venture capital-style investing, and it’s not something that we’ve seen before,’ said Michelle Mathieu, the CEO and CIO at $1bn RIA Fulcrum Capital. ‘I feel ill-equipped to step into that territory and it just remains to be seen what happens with these staggered liquidity offerings to insiders in addition to different indices.’
‘This is the trade-off between supply and demand forecasts here for the IPO.’
Though SpaceX stands to come to market at a valuation of roughly $1.8tn at its $135-a-share IPO price, Morningstar valued SpaceX at $63 per share, a roughly 53% discount to the offering. The investment research business cited uncertainty as to whether the company could successfully build orbital data centers for artificial intelligence businesses or deploy a reusable rocket which could be deployed multiple times per week.
Kostya Etus, CIO at $7.4bn RIA aggregator Dynamic Advisor Solutions, said the valuations assigned to companies like SpaceX ‘don’t make sense’ and will only exacerbate the concentration risk in the S&P 500 index, which has coalesced around the performance of several large technology businesses. Rules governing the S&P 500 hold that companies must spend a minimum of one year trading on the public markets before being added to the index; the Wall Street Journal reported last week that the committee at S&P Dow Jones Indices which governs the S&P 500 said it would not waive that requirement for SpaceX.
‘I think you have to do something in your portfolios.’ Etus said. ‘I’m not saying chase performance, but if you do nothing, and if you hold your small-caps or mid-caps or international allocation at a certain percent, it’s just going to keep deviating from that, and your delta is going to keep growing and growing, and eventually you’ll start losing clients.’
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