SpaceX's upcoming initial public offering (IPO) has forced Wall Street to abandon traditional valuation playbooks. Rather than comparing the rocket and satellite company to aerospace rivals like Boeing or telecom giants like AT&T and Verizon, major institutional investors are benchmarking SpaceX against unexpected peers: artificial intelligence (AI) infrastructure companies like GE Vernova and Vertiv, plus the notoriously expensive stock Palantir Technologies. This unconventional approach reveals the fundamental challenge of pricing a company with no obvious public competitors .

At a potential valuation of $1.75 trillion, SpaceX would trade at 110 times its 2025 revenue estimates, according to financial analysis firm PitchBook. For context, Palantir, one of the priciest stocks in the market, recently traded at 43 times expected revenue and 75 times earnings. Even by those lofty standards, SpaceX's valuation appears aggressive .

Why Can't Wall Street Use Traditional Aerospace Comparables?

The core problem is straightforward: SpaceX operates in a category of its own. The company has built a reusable launch system, driven down unit costs dramatically, and expanded into a commercial market where demand for launch capacity continues to grow. These accomplishments far exceed what traditional aerospace firms like Lockheed Martin have achieved. Lockheed trades at around 20 times next year's expected earnings, a multiple that investors argue fails to capture SpaceX's innovation and growth trajectory .

SpaceX's business also defies simple categorization. The company operates rocket manufacturing and launch services, but it also runs Starlink, a satellite internet service with massive growth potential. SpaceX's Chief Financial Officer Bret Johnsen told IPO bankers that the company is selling into "the largest total addressable market in human history," estimating the potential space business market at $370 billion and Starlink's addressable market at $1.6 trillion .

What Are Investors Actually Using to Value SpaceX?

Institutional investors have developed an alternative framework that focuses on cash flows, growth profiles, and risk characteristics rather than industry sector. This approach has led them to compare SpaceX to companies benefiting from the AI data-center buildout, which have been rewarded with rising share prices and high multiples .

• GE Vernova Comparison: This industrial company, which sells power and cooling equipment for data centers, recently traded at around 30 times expected cash flow and four times last year's revenue. Investors argue SpaceX's launch operations deserve similar re-rating as the "picks and shovels" of the data-center age.
• Vertiv Benchmark: Another data-center infrastructure provider, Vertiv traded recently at 19 times expected operating profit and six times last year's sales. Like GE Vernova, it has soared on the back of AI spending, a pattern investors believe SpaceX will replicate.
• Palantir Model: For Starlink specifically, some investors point to Palantir's secular growth, high return on invested capital, good margins, and asset-light business model as a better template than legacy telecom firms like AT&T and Verizon.

A senior executive at one of SpaceX's large institutional investors explained the reasoning to Reuters: "I wouldn't look at a legacy AT&T and Verizon as being very relevant to the economic model for Starlink, even though they're both in the business of giving you communication." The argument is that traditional telecom comparables are skewed by aging fixed infrastructure, saturated domestic markets, and years of modest growth .

How Are Smaller Investors Approaching SpaceX's Valuation?

Not all investors are conducting deep independent analysis. Jay Bala, portfolio manager at Toronto-based AIP, which manages roughly $100 million in assets with a large portion concentrated in SpaceX, acknowledged the practical reality: "I'm piggybacking on the largest funds in the world. A huge amount of due diligence has already been done. I'm not going to second-guess some of the biggest investors on the planet." He also noted the challenge of obtaining detailed financial information about SpaceX: "You can only get so much. It's hard to get numbers sometimes" .

"Investors should size positions with the understanding that they are paying a platform premium today for infrastructure-monopoly economics tomorrow," noted Franco Granda, analyst at PitchBook.

Franco Granda, Analyst at PitchBook

This dynamic highlights a key tension in SpaceX's IPO: many investors have already decided the company is a great investment and are now working backward to justify that conviction using whatever comparables fit the narrative .

What Do Valuation Experts Say About This Approach?

Aswath Damodaran, a valuation expert and finance professor at New York University's Stern School of Business, offered a candid assessment of the methodology. He acknowledged SpaceX's genuine competitive advantages: "Nobody else has that capacity to launch satellites in numbers and at the price that they can do. That's their big advantage." However, he was skeptical about the broader valuation framework .

"Pricing is always going to be messy here," Damodaran stated. "Much of the current pricing reflects investors justifying their decision to purchase the shares rather than relying on traditional metrics. They've made the decision already that SpaceX is a great buy. Now they're looking for some way that they can justify that, and this pricing sounds like that exposed rationalization."

Aswath Damodaran, Finance Professor at New York University's Stern School of Business

Damodaran added that the current valuation relies heavily on "mood and momentum." He suggested that investors are hoping sufficient enthusiasm will carry the stock higher when it goes public, independent of whether the valuation multiples are truly justified by fundamentals .

How to Evaluate SpaceX's Valuation as an Investor

• Understand the Comparables Game: Traditional aerospace and telecom comparables do not apply to SpaceX. Instead, focus on whether AI infrastructure and high-growth technology companies are truly comparable in terms of risk, cash flow generation, and market opportunity.
• Assess the Market Size Claims: SpaceX's CFO claims a $1.6 trillion addressable market for Starlink and a $370 billion total space business market. Evaluate whether these figures are realistic and whether SpaceX can capture a meaningful share of these markets.
• Consider the Elon Musk Premium: Much of SpaceX's valuation reflects investor confidence in Elon Musk personally, similar to Tesla's valuation dynamics. Determine whether you believe this premium is justified or represents speculative excess.
• Recognize Information Asymmetry: SpaceX is a private company with limited financial disclosure. Smaller investors have access to far less information than large institutional backers, making independent valuation analysis difficult.

SpaceX is scheduled to hold an analyst day on April 21, and the company has confidentially filed for a U.S. IPO with plans to raise $75 billion this year. The valuation debate will likely intensify as more details emerge about the company's financial performance and growth prospects .

The broader lesson from SpaceX's pricing challenge is that when a company operates in genuinely novel territory, traditional valuation frameworks break down. Wall Street must either invent new comparables or admit that much of the valuation rests on forward-looking assumptions and investor sentiment rather than historical financial metrics. For SpaceX, the answer appears to be both.