The hottest IPO in his­to­ry hap­pened this week: Elon Musk’s SpaceX (SPCX). We already talked about it a bit on the pod­cast, but in case you haven’t lis­tened to it, here’s my take on it.

As a sto­ry? It’s incred­i­ble. You have to hand it to Elon. He shoots for the moon (or Mars).

As a busi­ness? Who knows? Maybe it’ll live up to Elon’s dreams and take a big chunk of the $28.5 tril­lion “TOTAL ADDRESSABLE MARKET” (TAM) that it’s claim­ing it’s chas­ing (“…the largest TAM in human his­to­ry”).

As an invest­ment? It’s an exer­cise in insane spec­u­la­tion. And you’d have to be com­plete­ly nuts — or like a punt — to put mon­ey into it at those prices.

In the Unit­ed States, a Form S‑1 is the ini­tial reg­is­tra­tion state­ment required by the U.S. Secu­ri­ties and Exchange Com­mis­sion (SEC) for com­pa­nies going pub­lic. And here’s the kick­er buried in the SPCX S‑1: 93% of that head­line TAM is AI — the bulk of it some neb­u­lous “enter­prise AI appli­ca­tions” buck­et. The rock­et busi­ness, you know, the entire rea­son the com­pa­ny exists, is bare­ly 1% of the num­ber on the slide.

But what does it all mean?

Let’s put it in some con­text.

Glob­al GDP in 2025 was rough­ly $117 tril­lion. SpaceX’s TAM is about a quar­ter of every­thing every human being on Earth pro­duces in a year — and that’s after exclud­ing Chi­na and Rus­sia, so it’s an even big­ger share of the econ­o­my it actu­al­ly claims to address.

SpaceX’s 2025 rev­enue was $18.7B. In oth­er words, they’re today cap­tur­ing a frac­tion of one per­cent of the mar­ket they say they’re chas­ing.

On the pod­cast, I said the PROPCAF on SpaceX is 1750x. But my math was off — I was using the Q1 cash­flow num­ber, not the trail­ing-twelve-month one (serves me right for try­ing to shoot off a quick Tik­Tok on a Mon­day). It’s actu­al­ly a much more rea­son­able… 370x. As a reminder — we don’t look at any­thing over 7x. We often say a 7x PROPCAF means the com­pa­ny could pay back your buy price in 7 years. Based on its cur­rent oper­at­ing cash­flow, which is near­ly all from the Star­link (ISP) busi­ness, SPCX would take 370 years to pay you back.

Worth more than Amazon

This week, SPCX leapfrogged Ama­zon to become one of the most valu­able com­pa­nies on the plan­et. Think about that for a sec­ond. Ama­zon’s annu­al prof­it is around four times SpaceX’s entire rev­enue — and yet SpaceX is worth more. Go fig­ure that one out.

Speak­ing of the TAM, Aswath Damodaran, Pro­fes­sor of Finance at NYU Stern School of Busi­ness, and author of many books on val­u­a­tion, wrote a pret­ty inter­est­ing pre-IPO analy­sis. He said the TAM “bor­ders on fan­ta­sy” and “…I won­der what an entire­ly Grok-writ­ten prospec­tus would have looked like, and whether we would have noticed the dif­fer­ence.” When your address­able mar­ket is a quar­ter of world GDP, you haven’t told the investor any­thing about the busi­ness, you’ve told them you’d rather they did­n’t look at the busi­ness. It reminds me of the old dot com days when every busi­ness plan claimed their goal was cap­tur­ing 1% of the glob­al mar­ket for this or that sec­tor. It was com­i­cal. Appar­ent­ly SPCX is tak­ing the same approach. I know Tony has already referred to Elon as a Bond vil­lain, but seri­ous­ly, I nev­er thought he was Dr Evil.

As for what the future holds for space and AI — nobody knows how these things are going to play out. I’m pret­ty sure Chi­na is going to play a pret­ty big role in both, as well as EVs and robot­ics. If AI takes over every white col­lar job, will that mar­ket be worth $22.7T? I have no idea. But it’s a big “if” either way.

And is Elon Musk a sta­ble-enough guy to pull it off? I have my doubts.

What would it take for QAV to invest in SPCX?

There are only two ways a 370x PROPCAF becomes a 7x mul­ti­ple. Either the cash flow climbs to meet the price — and only if the share price nev­er ris­es again, because the moment it does, the tar­get runs away from you. Or the price falls to meet the cash flow.

To get there at today’s price, SpaceX would have to throw off about as much cash as Apple, Microsoft and Alpha­bet gen­er­ate com­bined — just to reach the ceil­ing of QAV’s buy zone.

Pos­si­ble? I guess so.
Am I going to bet on it?
Not like­ly.

Speak­ing of Dr Evil… have you seen this?
Appar­ent­ly Mike Myers is gear­ing up for anoth­er instal­ment of Austin Pow­ers. Maybe this time, Dr Evil will be work­ing for Elon.

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QAV Myth Killers is a week­ly col­umn in the QAV newslet­ter, tak­ing apart a piece of
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