The much-anticipated initial public offering (IPO) of SpaceX is set to open this week, marking what could be the largest IPO in history. With a proposed price of $135 per share, the company aims to raise a staggering $75 billion, valuing it at around $1.77 trillion. While the company is widely seen as a key player for the future and an appealing choice for long-term portfolios, the main debate is whether the stock is worth its expected price.
Valuation is always subjective and heavily reliant on assumptions. At one hundred times sales, the $135 price tag looks premium. Sales drive earnings, and earnings drive stock prices over time. For example, independent research firm Morningstar pegs the fair value closer to $70 per share (implying an enterprise value of $780 billion), suggesting the IPO price leaves little margin of safety.
Given this debate, how should everyday investors approach the IPO? To
This post was originally published on this site.
