SpaceX is set to launch the largest initial public offering in history this week, aiming to raise $75 billion at a $1.75 trillion valuation, but the timing couldn't be more complicated. Global markets are in turmoil, semiconductor stocks have collapsed, and Wall Street's most respected investors are deeply divided on whether Elon Musk's rocket and satellite company is a generational opportunity or a dangerous bubble waiting to burst.

The IPO arrives as the stock market faces a perfect storm of concerns. The S&P 500 declined 2.64% on Friday, while the tech-heavy Nasdaq fell 4.18%, and the Philadelphia semiconductor index plummeted 10.26%. The VIX fear index, which measures investor anxiety, jumped 24% over the past five days. Adding to the pressure, oil prices have surged to $97 per barrel due to renewed Middle East conflict, and economists are now worried that inflation could exceed unemployment rates, a rare and historically troubling scenario.

Why Are Investors So Divided on SpaceX?

The core tension comes down to valuation and profitability. SpaceX is not currently profitable, yet it's being valued at $1.75 trillion, a figure that assumes extraordinary growth over the next several years. To justify this valuation, SpaceX would need to grow revenue by 30 times in just four years while still trading at 25 times free cash flow, according to some analysts.

Eight prominent investing professionals offered starkly different advice on whether retail and institutional investors should buy shares when trading begins. Their perspectives reveal the fundamental uncertainty surrounding the company's future prospects and the risks of buying into such a heavily hyped IPO.

How to Evaluate SpaceX as an Investment: Key Considerations from Wall Street Experts

• Valuation Risk: Multiple experts warn that SpaceX's $1.75 trillion valuation leaves little room for error. Dhruv Maniktala, Chief Investment Officer at True North Advisors, stated that his firm, which has owned SpaceX shares since 2019 at much lower valuations, is now "sellers rather than buyers" at current prices.
• Retail Investor Exposure: About 30% of IPO shares will be allocated to retail investors, a proportion that some analysts view as a warning sign. Jeff Judge, Managing Partner at Chesapeake Financial Planners, noted that this allocation suggests either "a money grab to get as many inflows in or there isn't as much appetite for it at the institutional level as they had expected," neither of which is a strong buy signal.
• Historical Tech IPO Performance: Data from Truist shows that while 57% of major tech IPOs trade up in their first week, the average maximum drawdown in the first year is 55%. This pattern suggests that even if SpaceX surges initially, investors could face significant losses within 12 months.
• Volatility and Short-Term Trading: Keith Fitz-Gerald, founder of the Fitz-Gerald Must Have Portfolio ETF, warned that retail traders will "almost certainly rue the day" they bought into big IPOs like SpaceX, as high-speed traders and quantitative firms will use derivatives and technical strategies to gain advantages over average investors.

The disagreement among experts is striking. Some, like Stephanie Link, Chief Investment Strategist at Hightower Advisors, would buy a small 2% allocation without hesitation, viewing SpaceX as a potential "huge theme" that investors shouldn't miss. She acknowledged the company is "impossible to value" in traditional terms but argued that Musk's vision of satellite data centers and global connectivity could justify the price if it materializes.

"I don't think you want to be against the next huge theme," Link said, recommending investors get some "skin in the game" despite the volatility risks.

Stephanie Link, Chief Investment Strategist at Hightower Advisors

Others are far more cautious. Robert R. Johnson, a professor of finance at Creighton University, said he "wouldn't touch" the SpaceX IPO and recommended the same for most investors. He noted that the valuation assumes all of SpaceX's growth projections play out perfectly, and that Elon Musk's track record with Tesla has created a "fan effect" that drives valuations beyond what fundamentals would suggest.

Brian Mulberry, Chief Market Strategist at Zacks Investment Management, emphasized that his firm typically "looks for a strong road to profitability before we take positions" and plans to wait and see where actual revenues come in before making a decision.

Brian Mulberry, Chief Market Strategist at Zacks Investment Management

What's Driving the Market Turmoil Around the IPO?

The timing of SpaceX's IPO is particularly fraught because it arrives as investors are reassessing the entire technology sector. Strong job growth reported on Friday surprised economists, with payrolls rising 172,000 in May, far above expectations of around 88,000. While this sounds positive, it has spooked markets because it suggests the Federal Reserve may need to raise interest rates to combat inflation, making borrowing more expensive for companies and investors alike.

The concern is especially acute for unprofitable tech companies like SpaceX, Anthropic, and OpenAI, all of which are expected to go public this year. If the Fed raises rates, the cost of capital for these companies increases significantly, which could pressure their stock prices.

Additionally, the growth story in the broader economy is narrower than it appears. All U.S. private non-residential investment growth outside of artificial intelligence has been declining for six straight quarters. Job gains in May came almost entirely from just three sectors: leisure and hospitality, government, and private education and health care services. Only 10,000 jobs were created outside those sectors, suggesting that economic strength is highly concentrated rather than broad-based.

"The circularity of the AI economy is attracting more attention: the same handful of firms raising money, buying chips, leasing compute, and booking revenues off one another," noted James Smith, an analyst at ING, adding that if you strip out AI, "the rest of U.S. private non-residential investment has been falling year-on-year for six straight quarters".

James Smith, Analyst at ING

Some analysts are drawing parallels to 1999, the height of the dot-com bubble, when investors poured money into unprofitable tech companies with grand visions. The concern is that SpaceX, despite its real achievements in rocket technology and satellite deployment, could become caught up in the same speculative fervor that ultimately ended in massive losses for retail investors.

For investors trying to decide whether to buy SpaceX shares when trading begins, the message from Wall Street is clear: proceed with extreme caution. The company's valuation is historically high, market conditions are turbulent, and the long-term profitability story remains unproven. Whether SpaceX becomes the next transformative company or a cautionary tale may depend less on its technology and more on whether the broader market's appetite for unprofitable growth stories holds up under pressure.