Why I Am NOT Buying the SpaceX IPO — What 20 Years of Investing Taught Me

SpaceX's historic IPO, initial public offering, is this Friday and is a no-no for me. Now, the valuation is reportedly approaching $1.75 trillion, and that's a trillion with a T, that's a thousand billion. Every investment platform I use seems to be emailing me again and again about it. The IPO is reportedly oversubscribed. Investors are lining up to get it. There's lots of FOMO, fear of missing out. The excitement is everywhere, and yet it's a big no-no for me. I'll tell you why. It's not because I think SpaceX will fail, it's quite the opposite. It's a fantastic company. In fact, I think SpaceX could become one of the most important companies of our generation, our lifetime. Problem is not the company. I think the valuation is what I can't seem to swallow. After investing for more than 20 years now, I've seen that a lot of times those two things can be quite different. A great company and a great investment are not always the same. In fact, you could get like a fantastic company that is a terrible investment depending on where you invest. In fact, history has shown us plenty times when great companies became bad investments for some investors. Depending on when they were bought. Now in this video, I will explain to you why, one, I'm not buying SpaceX, two, why I usually avoid IPOs, and what history teaches us about investing during hype cycles like this, and also why most investors are asking the wrong question about SpaceX altogether. If you're new here, I'm Dr. Andy Egwim. I'm a former salaried NHS GP and I'm the founder of Moneywise Doctor. I've also written this book. I'm the author of The Moneywise Doctor: which became an Amazon bestseller on investing in the UK. So I've been investing for over 20 years, and I've invested in index funds, individual stocks, private businesses including startups. I've also done a bit of property myself. So I've made some mistakes, I've had some successes, and 4 years ago investing helped me reach financial freedom, which allowed me to say goodbye to my salaried work. So my last salaried work was about 4 years ago. Now, in my experience, One lesson keeps repeating itself again and again is that the best investment opportunities usually appear when nobody is excited, and the most dangerous ones appear when everyone is excited. That's why I love that Warren Buffett saying, be greedy when others are fearful and fearful when others are greedy. Let's talk a little bit about SpaceX. Let's start with the obvious details. One, SpaceX is just extraordinary. You can't take that away. Reusable rockets, Starlink satellite communications, launch infrastructure, artificial intelligence, potential future opportunities in space. So that is obvious. The bull case is obvious. Elon Musk has spent over the last 20 years doing things that people said couldn't be done. In fact, that's why millions of investors are excited, and honestly, I understand it. If you told me SpaceX became one of the biggest companies in the world in the next 10 years, will I be surprised? No. But that's not my concern as an investor. The question most investors get wrong— most investors ask this question: is this a great company? That is a wrong question. The better question is: is this a great company at this valuation, at this price? Because investing returns come from the relationship between 3 things: price, value, and future growth. It's not from excitement, it's not from headlines, it's not from quality of the story. Let's look at the numbers. That's one thing you have to look at because this is where things become a bit more difficult. At a reported IPO valuation of roughly $1.75 trillion, SpaceX generated roughly $20 billion in revenue over the last year. Not bad, but that's roughly 90x the sales. At the IPO price. So investors are paying about $90 for every $1 of revenue the company generates. Now, not profit, we are talking about revenue here, not even profit. So now compare that with companies like Google, okay, Alphabet. Google generates hundreds of billions in revenue, produces enormous profits, has one of the strongest moats in the world. Try competing with Google, difficult. And it trades on a dramatically lower sales multiple. So immediately we have to ask, what assumptions are investors making here? Because you're not paying for today's business, obviously. You're paying for a future version of SpaceX. So the dream, a much bigger version, yes, a much more profitable version, a version that doesn't exist yet. So it's still a dream. Great. Now the thing that really matters, and this is the part that many people are missing, is that SpaceX is not just one business. It's really several businesses put together. You have rocket launches, Starlink, AI infrastructure, xAI, future projects. The challenge is that not all these businesses are profitable. In fact, much of the profitability currently— I've looked at the papers, I've looked at the documents— it comes from Starlink, which has millions of subscribers around the world, about 10 million. The AI side is losing billions. Future projects require enormous capital. Many of the biggest opportunities investors are excited about, they haven't happened yet. So which means investors are being asked to pay today for tomorrow's possibility. Maybe those possibilities will happen, maybe they will exceed those expectations, But that's speculation now. That's not investing. This is why I generally avoid Initial Public Offerings, IPOs. There's a lot of hype. This surprises people. The last IPO I personally bought was over 20 years ago, and I was relatively new as an investor. It's not because IPOs are bad. It's because IPOs often arrive at moments of maximum excitement, and there's a lot of hype and FOMO. The company chooses when to go public. The investment banks choose how to market it. The media covers it endlessly. Everybody's excited. Everyone is going to make some money. But how about the retail investor like you? The excitement tends to be very expensive, and history is full of examples. There was Coinbase IPO, Uber IPO, and so many. Many investors rushed in on day one. Many regretted it. Here's the funny thing: I skipped Facebook IPO. Today I own Meta at good valuation. I skipped Coinbase IPO. Today I own Coinbase at far less valuation than when it was IPO'd. I wasn't even in a position to buy Google's IPO, but today I own Alphabet at a nice valuation. So missing an IPO doesn't mean missing the investment opportunity altogether. Public markets usually give presents investors many opportunities over time to still own that company. So one thing to pause about, because this is where many doctors and dentists get themselves into trouble with investing. They see a headline, they see excitement, they see everybody talking about an investment, and they assume the next step is to buy it. They don't want to miss out. It's FOMO. But after 20 years of investing, and even after having written a best-selling investing book, I've learned that investing starts long before anything. With preparation. In medicine, we don't prescribe before we diagnose, and in investing, we shouldn't invest before we have a process in place. One of the biggest mistakes I've seen doctors and dentists and healthcare professionals make is rushing straight into investing, and they rush to what should I buy before they walk through the fundamentals. No, we call them the 7 steps. Things like building an emergency fund, understanding risk, using the right tax-efficient accounts, knowing how investing fits into your wider financial goals, avoiding costly mistakes that can set you back many years. And that's why I've created a free guide, the 7 Steps, is the doctor's investing checklist. So it's a doctor's investing safety checklist. It walks you through the 7 key steps that every doctor should complete before they even invest a single pound. Now, thousands of doctors have already used it to start their investing journey more safely and with greater confidence. Now, it's totally free. If you like a copy of the guide, just comment 7 Steps below and I'll send it to you totally free to download, and that could help you to start safer in your investing journey. And if you are watching this later, you can still look for the download link in the description if you're watching this after the IPO. Now let's get back to SpaceX. I want to share a lesson I learned from Benjamin Graham. One of the most important ideas in investing came from a man called Benjamin Graham. He was Warren Buffett's mentor and the author of that book called The Intelligent Investor. Fantastic book, difficult to read. The concept is of the margin of safety. The actual idea comes from engineering originally. Imagine you are building a bridge. If engineers estimate that the the heaviest vehicle likely to cross that bridge weighs 2 tons, they don't build a bridge that can only support 2 tons. That would be reckless. They leave some margin. So instead, they might build a bridge capable of supporting 10 or 20 tons. Why? Because they know their calculations could be wrong. I mean, when all is 100% right, unexpected things happen, conditions change. The extra capacity creates a margin of safety. Government policy might change. So many things happen. Investing works in exactly the same way. The future is uncertain. Your assumptions might be wrong. The economy might change. Competition might emerge. Management might disappoint. The government might change. So, so rather than paying the maximum possible price for a great company, Graham argued that investors should buy at a price that gives them room to be wrong. That's called the margin of safety, and that's a principle I apply in investing. Let me give you a simple example. Imagine a house on your street is worth £400,000 today. Someone tells you in the future that it could be worth £1.5 million. Maybe a new road is passing that area, or a retail park is being built, or something great is happening around there. Maybe they are right, maybe they are wrong, but would you pay £1 million today for it purely based on that future possibility? Probably not. You probably want a discount. You want some room, you want some protection in case things don't go exactly as planned. You want to still be happy with your investment. Yet investors do the opposite all the time, especially in the stock market. You are paying for future potential before it arrives. They pay for the story, they pay for the excitement, they pay for what might happen, and then later you're left wondering why your returns are disappointing. That's why price matters, valuation matters, and margin of safety even matters more, especially now, because a great company could end up being a terrible investment. Now here's something interesting that most people are missing. If you're a long-term passive investor investing in index fund, the entire debate may not even matter for you at all because if SpaceX becomes one of the world's greatest companies, you are probably going to own it eventually anyway, whether it's overvalued or not, through your pension, your ISA, your global index fund, whether you buy a NASDAQ fund, it could even be an S&P 500 fund. So eventually the market will make room for it. In fact, NASDAQ has already adjusted some of its rules to accelerate the inclusion of SpaceX into NASDAQ's QQQ. So many investors will become SpaceX shareholders whether they want it or not, whether they intend to or not. That's one of the things about index fund investing, good or bad. You don't have to identify every future winner. You simply participate when they become winners. But there's a bigger lesson here, and this is really why I wanted to make this video. The lesson is not just about SpaceX. The lesson is investor behavior. You don't get extra points for investing in complicated things. You don't have to invest in everything. You You don't get extra points for buying exciting IPOs. You don't get extra points for predicting the future. In fact, some of the best returns I've ever achieved came from patience, sensible valuation, diversification, tax efficiency, long holding periods. In fact, the hardest thing in investing is not finding the opportunities, it's ignoring opportunities. Discipline. Especially when everyone else seems excited. So could SpaceX become one of the greatest companies ever built? Maybe. Absolutely. Could this IPO perform brilliantly? Of course, absolutely. Could I be wrong? Of course, I don't know everything. But investing is not about being right every time. It's about making decisions where the odds are in your favor. Personally, I'll be watching this one from the sidelines. Not because I don't admire the company. Not because I don't think Elon Musk is a wonder, you know, he can pull off miracles. Um, no. And it's not because I think SpaceX will fail. It's simply because At this valuation, I don't see enough margin of safety, and after more than 20 years of investing, I've learned that protecting your downside matters just as chasing the upside. So I'm curious, are you buying SpaceX IPO, or are you sitting this one out? Tell me in the comments. Let me know. I want to know your opinion. I want to know what you think. I'm happy to answer any questions you've got as well. And of course, if you like a copy of my 7 Steps to Investing Guide for safety before I start investing, just comment 7 steps below and I'll send it to you. And if you are watching this later, probably after the IPO, you will find the free download link in the description, or just comment and request it and I'll share it with you. All right then, I hope you found it useful, and if you like this video, feel free to share with someone and hit the like button and subscribe for more. All the best, bye-bye.