After yesterday's post, "I'm Betting on the End of Car Ownership: Why Tesla is the only stock I own," I got a lot of emails asking if we were going to invest in the SpaceX IPO. Fair question. SpaceX is set to go public on June 12, at around a $1.75 trillion valuation, the biggest IPO in history, and both Tesla and SpaceX are innovative, Elon Musk-run companies, so if we're invested in Tesla, we surely would invest in SpaceX, right?
The short answer is no, we're not going to invest in SpaceX at the IPO.
To be very clear, by not investing in SpaceX at the IPO, I'm not betting against SpaceX or Elon. SpaceX is one of the most innovative companies on earth and I expect it to do well. It's just that to invest in a single stock like SpaceX, I have to know something the rest of the market doesn't, or the market has to be badly underestimating something I understand well. That gap is the only edge I trust. Without some clear asymmetry, I can't get excited about a stock no matter how great the company is.
I think the rest of the market is completely missing the rise of autonomous driving, and that it will bring the end of car ownership as we know it. That's our bet with Tesla. I wrote up the whole thesis here, but the short version is that most people have no idea how good self-driving has gotten or what robotaxis are about to do to car ownership. That gap between perception and reality is the whole bet.
I don't have anything like that on SpaceX. I don't know something the crowd doesn't. I can't point to a misunderstood piece of the story. Without that, buying it would just be me chasing a great company, not making a real investment.
We'll still own SpaceX
Except for Tesla, all of our public equity exposure in the USA is through VTI, Vanguard's total-market ETF. It's a single low-cost fund that holds essentially every publicly traded US company, so owning it means owning a tiny slice of the entire US market in one shot. That means we'll own SpaceX even if we never buy SpaceX ourselves, because VTI can add a new company like SpaceX after only about five trading days. At IPO the public float on SpaceX is tiny, so it would come in at under a tenth of a percent of the fund. If SpaceX clears the bar for the S&P 500, probably 2027 at the earliest, it could land somewhere in the low single digits of the fund.
I love SpaceX
Let me be clear about how much I love what they've built at SpaceX, and why I'm glad I'll own it through VTI.
Before SpaceX, putting a kilogram into orbit cost around $54,000 on the Space Shuttle. Today a Falcon 9 does it for under $3,000. That's roughly 20 times cheaper, and Starship is aiming far lower than that. I write in The Disruption Formula that when a company can cut cost by 10X, it creates an unfair competitive advantage, and unfair competitive advantages win markets.
Then there's Starlink. We sailed to Antarctica on a ship that had Starlink and worked the whole way down, taking Zoom calls from Antarctica. We recently flew Air Baltic, which now has Starlink, and had blazing-fast wifi sitting on the tarmac and in the air, streaming 4K Netflix the whole flight.
I've started picking airlines based on whether they have Starlink, and I'm not the only one. One good Starlink flight and business travelers start booking around it. Any airline dragging its feet on retrofitting is headed for a world of hurt. Fast wifi in the air is about to go from perk to requirement.
Same goes for X. I'm on it every day to keep up with what's actually happening in the world. It's how I track trends in real time.
And now the AI side is paying off too. xAI is part of SpaceX, and Anthropic just agreed to pay them around $1.25 billion a month to use the compute at their Colossus data center in Memphis. That's roughly $15 billion a year, one of the biggest AI labs in the world renting SpaceX's infrastructure. Rockets, satellites, and now AI compute. The company is firing on all cylinders.
So me not investing in the SpaceX IPO isn't a knock on the company. I love what they're doing.
FOMO
If you're on social media, it can seem like everyone is already in SpaceX, or planning to invest at the IPO. That's created a lot of FOMO, fear of missing out. Luckily I'm part of some groups like Long Angle, the trusted community for navigating wealth, and a few days ago they polled their members, who fall into the HNW or UHNW baskets. Of the 290 members who responded, 17% already own SpaceX shares, and only 9% planned to invest in the IPO.
I mention this because a lot of friends who don't have access to groups like Long Angle assume all the rich people are buying SpaceX at the IPO, and that's just not true. So don't invest because of FOMO. Study after study shows that the large majority of professional fund managers, people who do this full time with teams and resources, fail to beat a simple index fund over 10 or 20 years. That's the whole argument for buying the index rather than individual stocks: it quietly captures the winners for you, at near-zero cost, without you having to be right about any one company.
America
I'm just glad this IPO is happening from an American company, run by an American bank, on an American stock exchange, launching rockets from American soil, from an entrepreneur who is American. And it's not just SpaceX. OpenAI, Anthropic, Databricks, Cerebras, Crusoe, Stripe, Discord, Strava, and Lime could all IPO this year too, all at the forefront of technology and innovation, and all American. That's why I feel so comfortable with VTI. As long as America is leading the way in these industries, a single low-cost fund that holds essentially every publicly traded US company means we own the entire US market in one shot. And I never bet against America when it comes to innovation and capitalism.
Are you investing in the SpaceX IPO?
You've heard my arguments above. Now I want to hear yours. Are you investing in the SpaceX IPO, and if so, why or why not? Let me know in the comments below.