SpaceX IPO is now oversubscribed: is it time to invest?

SpaceX's blockbuster IPO is attracting exactly the kind of demand many expected from Elon Musk's most ambitious company.

The offering is now reportedly oversubscribed ahead of its June 11 pricing, with institutional demand already exceeding the number of shares available.

The strong interest highlights investor enthusiasm for a company that spans rockets, satellite internet, and artificial intelligence, but it also raises an important question: does high demand automatically make SpaceX a good investment?

The answer is less straightforward than the headlines suggest.

Demand is strong, but not necessarily extraordinary

According to Bloomberg, SpaceX's IPO order book has attracted multiple institutional investors seeking to buy roughly $10 billion worth of shares as demand builds ahead of pricing.

The company plans to sell 555.6 million shares at $135 each, raising approximately $75 billion and valuing the business at about $1.8 trillion.

Meanwhile, Reuters reported that orders have reached roughly $150 billion for the $75 billion offering, meaning the deal is currently about two times oversubscribed.

At first glance, that sounds impressive. However, some market observers note that highly sought-after IPOs are often four to five times oversubscribed before pricing.

While SpaceX has comfortably exceeded the minimum threshold needed for a successful deal, investors will be watching closely to see whether demand continues to build before books close.

The company is also expected to allocate a significant portion of shares to retail investors, potentially making it easier for individual investors to gain exposure than in many previous blockbuster IPOs.

The case for investing in SpaceX

The bullish argument remains centered on growth.

SpaceX currently dominates commercial rocket launches and operates Starlink, one of the world's largest satellite internet networks.

However, much of the excitement surrounding the IPO comes from the company's artificial intelligence ambitions.

Investors are increasingly valuing SpaceX not as a traditional aerospace company but as a potential AI infrastructure giant.

The company's prospectus outlines plans ranging from expanding AI computing capacity to eventually deploying computing infrastructure in space.

If successful, these projects could open entirely new revenue streams.

Investor enthusiasm around Musk also remains a major factor. Many investors view SpaceX as another example of Musk's ability to build businesses that initially appeared unrealistic but later transformed entire industries.

That belief has helped support one of the largest IPO valuations ever attempted.

Why some analysts remain cautious

Despite the enthusiasm, concerns about valuation have not disappeared.

Morningstar recently estimated SpaceX's fair value at approximately $63 per share, less than half the IPO price of $135.

The firm said its analysis incorporated multiple future scenarios, including highly optimistic outcomes involving reusable Starship rockets and commercially successful orbital data centers.

Even under Morningstar's most optimistic scenario, which valued SpaceX at $154 per share, the research firm assigned only a 7% probability to that outcome.

Valuation concerns are not limited to Morningstar.

New York University finance professor Aswath Damodaran, often referred to as the "Dean of Valuation," recently estimated SpaceX's value between $1.25 trillion and $1.35 trillion after reviewing the company's IPO prospectus.

While that remains an enormous figure, it still falls below the company's targeted valuation of roughly $1.8 trillion.

His conclusion was straightforward: the company appears too richly priced based on traditional valuation methods.

The debate illustrates the central question facing investors. SpaceX may be a remarkable business, but that does not automatically mean the stock is attractively priced.

Is demand enough to justify the valuation?

A common mistake during highly anticipated IPOs is assuming that strong demand automatically validates the company's valuation.

In reality, IPO demand often reflects a combination of long-term conviction, short-term trading interest, and expectations for first-day price gains.

Investors frequently place larger orders than they expect to receive because allocations are typically reduced in oversubscribed deals.

As a result, order-book figures can sometimes overstate genuine long-term demand.

The current oversubscription therefore, signals strong interest, but it does not necessarily answer whether the company's valuation is justified.

At $135 per share, SpaceX would debut with a market capitalization approaching $1.8 trillion despite generating $18.7 billion in revenue last year and reporting significant losses as it invests heavily in artificial intelligence infrastructure.

Supporters argue investors are paying for future opportunities. Critics argue they are paying for future possibilities that may never fully materialize.

Should investors buy?

For long-term investors, the key consideration is not whether SpaceX will be successful.

Most analysts agree that the company already has dominant positions in several important industries.

The bigger question is whether future growth will be sufficient to justify today's price.

Investors who believe Musk can transform SpaceX into a leading AI infrastructure company may view the current valuation as reasonable.

Those who prefer traditional valuation metrics may conclude the shares already reflect years of future success.

The next catalyst arrives on June 11, when the company is expected to finalize pricing.

Investors will be watching not only the final allocation figures but also whether demand strengthens further in the final days of the roadshow.

Those numbers may provide the clearest indication yet of how much confidence the market truly has in SpaceX's $1.8 trillion vision.

For additional insights, see our comprehensive guide on how to invest in SpaceX before its IPO.