'SpaceX valuation does not fit any traditional matrix': Uday Kotak on historic IPO

Kotak Mahindra Bank CEO Uday Kotak on Sunday described SpaceX's blockbuster stock market debut as "a true test for capitalism", saying the company's valuation defies traditional methods of assessment and represents a massive wager on the future.

Reacting to SpaceX's listing, Kotak wrote, "SpaceX IPO, listing, and beyond, is a true test for capitalism. The valuation does not fit any traditional matrix and is a huge bet on the future course of planet earth."

"Only time will tell whether we, the human race, have arrived into the fairy tale world we grew up in as children, or are in a mega bubble," he added.

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Kotak also praised Elon Musk's journey and the American innovation ecosystem, saying, "Either ways, kudos to the man who came as an immigrant, and to the country that has allowed such boundless creativity to flourish despite all the risks it embeds."

SpaceX was listed on the Nasdaq on Friday under the ticker symbol SPCX in what was reported to be the largest initial public offering in history. The company raised $75 billion, valuing it at approximately $1.78 trillion. Shares opened at $150, about 11% above the IPO price of $135.

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The rally continued on its first trading day, with the stock surging 19.2%, pushing SpaceX's market value to roughly $2.1 trillion.

The company, which operates rocket-launch services, satellite internet provider Starlink and artificial intelligence firm xAI, is now valued higher than Exxon Mobil, Bank of America and Coca-Cola combined.

Kotak's remarks drew support from others in the business community.

Matthew Rowean, Partner and Chief Commercial Officer at MATTE Projects, said Musk had overcome entrenched aerospace interests that historically resisted private-sector participation in space exploration.

"Reading Space Barons years ago tells a great tale of the entrenched aerospace monopolies he had to break through. Govts didn't want private industry in space," Rowean wrote on X. "Wherever the IPO goes in the short term, it represents private industry moving us interstellar and that's a good thing." 

Edelweiss Mutual Fund CEO Radhika Gupta also praised the American entrepreneurial ecosystem.

"Truly: kudos to the US for creating an ecosystem where one can start as an immigration, imagine wildly, and make the unbelievable happen," Gupta said.

Not everyone, however, is convinced by SpaceX's valuation.

Ahead of the listing, valuation expert Aswath Damodaran argued that the company's worth is being driven largely by narrative rather than fundamentals. "The value of SpaceX is driven by narrative," Damodaran wrote in a thread analysing the IPO.

He questioned the company's projected total addressable market, particularly estimates linked to artificial intelligence, and argued that a significant portion of the growth assumptions stretched beyond realistic bounds.

While praising the company's ambition and innovation, Damodaran said he viewed the stock as "overpriced" and expressed concerns about governance and potential overreach in AI.

"As an investor, I like the company for its audacity and imagination, but worry that it will overreach in AI, and if it does, its governance structure leaves it with no guardrails. At $1.8 trillion, it looks overpriced to me, but that is a personal judgment," he said.