SpaceX_IPO

 From the German-language MSN:

SpaceX is courting small investors - and that's not a good sign

Article by Frohn, Philipp • 1 day

June 12 could be a day of superlatives for the stock market: The US space company SpaceX is planning its long-awaited initial public offering (IPO) for next Friday - at a valuation of around 1.8 trillion dollars. This would put SpaceX ahead of Meta and Tesla. It would be the largest IPO in history.

The IPO is likely to make SpaceX founder Elon Musk the world's first trillionaire. Musk wants to raise around 75 billion dollars with the IPO. A good part of this is to come from private investors. SpaceX is courting these with conspicuous vehemence.

On Thursday, the neobroker Trade Republic first announced in a customer mail that it had been confirmed as a sales partner for the SpaceX IPO: Users should be able to subscribe to the shares. In the evening, the Flatex brand Degiro followed suit with a similar email. Meanwhile, even more banks and brokers are offering their customers to participate in the SpaceX IPO, including ING, Commerzbank and Deutsche Bank. This is remarkable because it is usually difficult or impossible for European private investors to get a direct hit on new US issues. At Trade Republic, it is even the first time that customers can subscribe to shares.

SpaceX is also targeting retail customers in the USA: Private investors will be able to participate in the IPO at the same time and at the same issue price as institutional investors via five online brokers – including Robinhood and Fidelity.

At first glance, this sounds like the "democratization of investment" that financial companies repeatedly invoke in the finest marketing speak: Everyone can participate.

In reality, however, SpaceX’s push toward retail investors is more of a warning sign for investors. It raises questions: Is Musk unable to place the roughly 555 million SpaceX shares that are set to go public with major institutional players? Does he need retail investors—even those in Germany—to fully sell the shares at his ambitious price expectations?

SpaceX is an extremely highly valued speculative stock. With a price-to-sales ratio of 94 for 2025, the space company is very expensive. At the same time, the company reported a net loss of just over $4.9 billion in the 2025 fiscal year. Many investment professionals are unlikely to be convinced by these figures. A Danish pension fund has already announced that it is placing SpaceX on its blacklist.

Another warning signal: SpaceX plans to offer its shares at a fixed price. Typically, IPOs include a price range as a way to test market demand at different valuations. A fixed price limits this price discovery process.

The fact that Musk is offering the shares at a fixed price suggests that he wants to defend SpaceX’s valuation—and may fear that the desired level would not be achieved through a standard pricing process. This shifts the risk toward investors, who now face an even greater danger of subscribing at an inflated price.

The recent decision by index provider S&P Global—not to approve a special rule for SpaceX, unlike Nasdaq—may also have contributed to Musk now increasingly targeting retail investors. The special rule that had been under discussion would have meant that the aerospace company could have been included in S&P indices and related ETFs more quickly than usual. Without the automatic demand boost from index investments, the stock will need to be more convincing after its debut in order to gain value.

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Perplexity AI:

Explain to me what a 'price-to-sales ratio' of a stock is...

A price-to-sales ratio, often written as P/S, tells you how much investors are paying for each dollar of a company’s revenue. It is calculated as the company’s market value divided by its sales, or on a per-share basis as share price divided by sales per share.

For example, a P/S ratio of 94 means investors are valuing the company at 94 times its annual sales. That is usually considered very high, but whether it is “too high” depends on the industry, growth expectations, and whether the company is profitable.

This ratio is especially useful for companies that are not profitable yet, because earnings-based measures like the P/E ratio may not work well in that case. In practice, investors usually compare a company’s P/S ratio with similar companies in the same sector rather than judging it in isolation.

For SpaceX in the article you were translating, the high P/S ratio is being used to argue that the stock is priced very aggressively relative to revenue.

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What constitutes a typical P/S ratio range for different industries?

Typical P/S ratios vary a lot by industry because some businesses naturally deserve higher revenue multiples than others. As a rough rule, capital-light, high-margin, high-growth sectors such as software, internet, biotech, and some semiconductors often trade at several times sales, while low-margin, asset-heavy, or highly cyclical sectors like airlines, grocery, and many distributors often trade below 1 times sales.

A practical way to think about it is:

Below 1.0: Often seen in mature, low-margin, or cyclical industries.

Around 1 to 3: Common in many ordinary businesses and mixed-quality growth companies.

Above 3 to 5: Usually indicates premium growth expectations or strong margins.

Above 5: Often found in very fast-growing sectors or especially favored companies, but it can also signal elevated risk if growth disappoints.

Examples from current industry data show wide dispersion: airlines around 0.46, grocery stores around 0.38, oil and gas refining around 0.64, while semiconductors are around 5.13 and biotechnology around 7.29. That is why a P/S ratio only makes sense when compared with peers in the same industry, not across unrelated sectors.

For a stock like SpaceX, a P/S of 94 would be far outside normal ranges for almost any industry, which is why the article treats it as a sign of very aggressive valuation.