SpaceX IPO: A Hedge against AGI

This week on June 12th, SpaceX will hold its Initial Public Offering (IPO) and become a public company for the first time. Based on their public filings, they plan to issue shares at $135 per share with a valuation of approximately $1.75-$1.80 trillion. That’s a trillion with a “T”.

Disclosure: I have requested an allocation of IPO shares from my investment broker. I may or may not end up being allocated and owning shares of SpaceX and may increase or decrease my position at any time without any follow-up in communication.

Why discuss SpaceX as a Value Investor?

I have been a fan of SpaceX for a long time and followed their development over many years. I enjoy space and watching rocket launches and have always found the dream of sending people to Mars to be particularly interesting and appealing. Because of that, I’ve wanted to own shares of SpaceX for a very long time, but have been prohibited from doing so because they were a private company. This week that all changes.

However, a major concern with the current IPO is that SpaceX is simply valued at an extremely overwhelmingly high price. SpaceX earned less than $20 billion dollars in 2025 revenue. Not earnings, revenue. Yet, it’s being valued at a price approaching 100x TTM revenue. That’s an absurd valuation.

As a value investor, it should be an instant turn-off. However, there are some complicating factors here that make SpaceX particularly interesting to me. Of note, while I began investing calling myself a “value investor”, I would more recently style myself something along the lines of a “10-bagger” investor or “multi-bagger investor.” Namely, I want to buy and own stocks capable of increasing 10x in value (or more) during my holding period.

Thus, when I think about SpaceX which would certainly NEVER qualify as a ‘value investment’, it appears at least feasible that it could be a potential ‘10-bagger’ over a reasonable holding period. That would only require achieving a valuation of about $18 Trillion in the next 10-25 years.

The SpaceX IPO is interesting for 3 Key Reasons

The IPO of SpaceX is going to be the largest IPO so far in human history. There is a reason for this and even though it leads to an extreme overvaluation potential, it also is due to the extreme potential of the underlying business.

1. SpaceX has a monopoly on Orbital Launch

SpaceX through its Falcon 9 and Falcon Heavy rockets as operational launch vehicles has a clear monopoly on launch capability to orbit and near space around Earth. No other company or government comes close to the current capabilities of SpaceX.

SpaceX launches represent a supermajority of total orbital launches to space each and every year for the last few years and their advantage only continues to grow. This is driven by their ability to reuse part of the Falcon 9 rocket, the booster stage, which dramatically gives them a cost advantage over their competitors. Not only does this show up in costs, but launch cadence as well.

This launch capability is instrumental to ALL of SpaceX’s advantages leading into their IPO and future valuation.

Current research and testing at SpaceX for their Starship rocket would only further increase their potential monopoly if it becomes the world’s first “fully reusable” orbital launch system.

2. Starlink represents the solar system’s most valuable future telecom business

Starlink is the name for SpaceX’s business of owning satellites that provide internet access from space. This business has over 10 million customers and is growing rapidly as they expand both in the United States and around the world.

This business is extremely profitable and is foundational to the underlying growth engine for the company. SpaceX has proven their ability to design, manufacture, and launch satellites into space at a cadence unmatched by anyone else.

I think it is likely that at some point in the future Starlink will have a customer base exceeding 1 billion paying customers both on Earth, the Moon, and Mars. While on Earth, Starlink has to compete with terrestrial fiber and other internet companies, I don’t think that’s likely to be a concern on other planets or moons. Satellite based internet will be the future for many on Earth but certainly throughout the solar system over time.

3. AGI - Artificial General Intelligence is a threat to economic stability

The last key business SpaceX is in is AI. They currently have an AI business (Grok / X / Twitter) of their own AI. But they also sell data center services to other AI companies like Google and Anthropic. These services represent billions of dollars a year in revenue and are a key potential revenue source for the future.

Elon Musk is convinced, although I’m not, that orbital data centers are the future. If he’s correct, then SpaceX will be the only company on Earth capable of designing, building, and launching sufficient Data Center Satellites to create such a business from scratch.

AGI, the idea that AI models will become sufficiently sophisticated to match or exceed human intelligence is a major tail risk for the economy. There is a low probability chance, but with a high potential downside, that a successful AI model could lead to mass layoffs or even if not mass layoffs, job losses that particularly impact an individual investor. All of this could occur while the broader economy itself is booming.

It is that particular situation: massive growth in revenue for AI companies, but personal job losses, that a hedge could be valuable. A hedge allows you to limit your potential losses with a small outlay.

How I think about SpaceX as a Hedge against AI risk

That’s the key for me today when I think about SpaceX. There are very few AI companies and even fewer options to gain exposure to AI revenue in the public markets. When SpaceX goes public this week, it will represent a new public option to gain exposure to the AI economy. Both direct through the Grok model ownership and indirect through the data center ownership.

That ownership and exposure has value. I can’t precisely value it, and when I do try, my only determination is that SpaceX is exceedingly overvalued. However, if I’m wrong, I want a small amount of exposure to limit my potential downside in a catastrophic outcome.

Due to the nature of IPO allocations AND my general goal of running a low cash position, even if I receive an allocation of SpaceX shares, my total portfolio weight will be less than 1% of my portfolio on IPO day this Friday. However, over time, my current thinking is that SpaceX would be the type of company I’d do some sort of dollar cost averaging into because of my inability to precisely value the stock. The goal being to hold a position between 1% and 5% of the portfolio, purely as a hedge against an extreme upside scenario.

I believe such a hedge is appropriate for two reasons:

1. It limits my downside.

By only allowing the position to be small (1-5%), then even if the company’s price collapses in the future, my risk is minimal.

2. A small hedge can provide large protection when the alternative outcome is large enough.

It is not impossible in my eyes, that an extreme bull scenario for SpaceX could involve the company some day being worth $18 trillion, or $50 trillion, or $100 trillion or more. A company with a monopoly on space access, when space businesses alone could easily have a GDP multiples higher than Earth’s current GDP would have extreme value.

Do I think that likely? Not necessarily. However, I can’t rule it out.

When the downside is low and the upside is a potential 10-bagger or more? That’s a very interesting situation to me.

Note 1: Downside is ONLY low because I’m allocating only a small percentage of my portfolio to the stock. The risk in SpaceX today as an overvalued IPO is EXTREMELY HIGH.

Note 2: I do NOT recommend SpaceX stock to any of my readers. This stock is extremely speculative and there is a clear risk of substantial losses exceeding -90%. The overvaluation here is very high based on traditional valuation measures. The purpose of this article is to outline my thoughts on my own rational for my own future review. Always do your own due diligence before making any investment decisions and consult a financial advisor before making any trades.