Wall Street just threw the rulebook out the window. Four days after pulling off the largest initial public offering in human history, Elon Musk's SpaceX just jumped over Amazon.
Let that sink in. A business that basically makes its money from satellite internet and reusable rockets is now worth more than the entire e-commerce and cloud computing empire Jeff Bezos built over three decades. For an alternative view, check out: this related article.
On Tuesday, SpaceX shares (NASDAQ: SPCX) shot up more than 14%, hitting around $220 a share. That brief surge pushed the rocket company's market cap to a staggering $2.85 trillion, speeding past Amazon's $2.64 trillion and even temporarily eclipsing Microsoft. While the price fluctuated toward the closing bell, settling around $2.65 trillion, the message from the market was loud and clear.
But if you look under the hood, the math makes absolutely no sense. Further coverage on this trend has been shared by The Motley Fool.
Amazon pulled in $717 billion in revenue last year and pocketed $78 billion in pure profit. SpaceX? It brought in $18.67 billion in revenue and actually posted a net loss of $4.94 billion. You read that right. Investors are valuing a company losing billions of dollars above a literal money printing press.
So why is everyone piling into a stock that is technically bleeding cash?
The Scarcity Game and the Options Frenzy
The immediate reason for this wild price action comes down to simple supply and demand. When SpaceX went public, it didn't dump all its shares onto the market. It floated a tiny fraction—under 5%.
When you have a massive wave of retail investors and institutional funds chasing a tiny sliver of available shares, the price goes vertical. On Monday, underwriters fully exercised the greenshoe option, bumping total IPO proceeds to $85.7 billion. But even with that extra supply, the stock is incredibly scarce.
Things got truly frantic on Tuesday when regulated options trading officially launched for SPCX. Within the first hour, hundreds of thousands of options contracts changed hands.
A massive influx of people buying call options forces market makers to buy up the underlying stock to hedge their own risk. Because you can't hedge SpaceX with anything other than SpaceX, the market makers had to buy millions of shares in a low-liquidity market. It created a classic feedback loop. The trading volume was so absurd that by mid-morning, over $23 billion worth of SpaceX shares had traded. That is more than the combined volume of Nvidia, Microsoft, Tesla, and Apple put together on a normal day.
It Is Not Just a Rocket Company Anymore
If you think people are paying $2.8 trillion just to launch satellites into orbit, you are missing the bigger picture. Investors are buying into three distinct businesses wrapped inside one brand.
- The Space Division: Building reusable Falcon 9 and Starship rockets. It has the lowest total addressable market but makes everything else possible.
- Starlink: The satellite internet network that currently generates the company's operational profits.
- Artificial Intelligence: This is the real driver behind the valuation premium.
The massive $4.94 billion net loss SpaceX reported wasn't because it can't launch rockets profitably. It is because SpaceX recently merged with xAI, Musk's artificial intelligence venture.
To compound the AI bet, SpaceX just announced a jaw-dropping $60 billion all-stock acquisition of Anysphere, the startup behind the massively popular AI coding agent, Cursor. By absorbing the leading tool in the "vibe coding" space, SpaceX is positioning its Grok model directly into the enterprise software market.
Investors aren't valuing SpaceX based on rocket fuel. They are valuing it as an AI powerhouse that happens to own the global satellite infrastructure required to run it.
Prepare for Severe Whiplash
It's easy to get swept up in the hype when a stock gains 62% from its $135 IPO price in less than a week. But buying at these levels is pure speculation.
The stock is currently being held up by a perfect storm of momentum, low float, and index inclusion anticipation. Passive funds and ETFs tracking the Nasdaq 100, FTSE Russell, and MSCI are preparing for fast-track inclusion later this month. They will be forced to buy the stock regardless of the price, which keeps the upward pressure alive for now.
But remember the mechanics of a tight float. A stock that can jump 19% in a day on thin volume can drop just as fast when the music stops.
If you're looking to jump into the SpaceX hype, stop looking at the daily stock charts. Keep your eyes on two specific metrics over the next two quarters: the integration of Cursor into the xAI ecosystem, and whether Starlink can reverse its slipping average revenue per user. Those numbers will decide if this $2.8 trillion valuation is the future of tech, or just history's biggest market bubble.
