SpaceX Belongs in the Too-Hard Pile

SpaceX may become one of the greatest companies in American history.

I really hope it does.

America wins when builders take big risks, and capital backs them. That is how our companies lead the world in rockets, satellites, defense, and AI.

But investing is not about cheering for progress. Investing is about owning businesses we can value.

That is where the SpaceX IPO becomes a problem for serious investors.

It is hard to tell what SpaceX will be in ten years, five years, or even two years. The company hopes to secure a valuation near $1.78 trillion. 

SpaceX’s IPO story has shifted from rockets to AI. That may excite Wall Street. It should make disciplined investors slow down.

At American Prosperity, we do not guess the future. We find businesses where the future is already coming into focus.

We look for steady demand, loyal customers, strong balance sheets, and numbers that support the story.

That is very different from buying a company because the story keeps expanding.

SpaceX began as a rocket company. Then Starlink became a major satellite internet story. Now the IPO pitch leans heavily into AI, orbital data centers, enterprise software, Mars, chips, satellites, and future markets.

That is a lot to ask investors to underwrite.

I am not saying it cannot work.

Elon Musk has proved skeptics wrong many times. Tesla changed the auto industry. SpaceX changed the launch business. Starlink changed satellite internet. 

Those are real achievements. I’m not going to bet against him. 

But our American Prosperity approach does not begin with admiration.

It begins with predictability.

The best investments rarely require heroic assumptions.

They usually come from businesses with clear demand, proven models, and profits we can see today.

They sell a product or service that fills a need. They earn cash. They reinvest that cash. Then they do it again. That is how compounding works.

It is quiet. It is steady. It is powerful. Wall Street often overlooks these businesses because they look boring. 

They do not promise Mars. They do not promise data centers in orbit. They do not produce standing ovations during IPO roadshows.

But they produce something better … cash flow we can measure.

That is what matters.

The combined operating cash flow of businesses under the SpaceX and Tesla banners was around $16 billion last year. 

Compare that with Alphabet (one of the stocks in our portfolio), which increased operating cash flow by nearly $40 billion last year alone.

That is the difference between a powerful story and a proven machine.

Alphabet is not perfect. No company is.

But when a business throws off cash at that scale, investors can measure it. They can test assumptions. They can compare the price with earnings power. That gives us a foundation. 

With SpaceX, investors are being asked to value a moving target.

Rockets are a real business. Starlink is a real business. AI could become a much bigger business. Enterprise AI could one day be massive. Orbital data centers may eventually become real.

But that is the problem.

When investors must value too many future businesses at once, the math gets cloudy. That is when discipline breaks down. Investors stop valuing the business in front of them.

They start paying for the dream they hope comes next.

One of the most underrated skills in investing is saying no.

Not because you are bearish, lack imagination, or doubt America. You say no because discipline protects capital.

Warren Buffett often talks about putting things in the “too-hard” pile. That is not laziness. That is wisdom. 

There are more than 3,000 public companies in America. We do not need to own the hardest ones to value.

That is the beauty of American markets.

Our stock market gives investors endless opportunities. Some are tied to AI. Some are tied to power. Some are tied to defense. Some are tied to infrastructure. Some are tied to automation.

We recommend the ones that already have earnings, cash flow, customers, and are growing in plain sight. That is where our American Prosperity approach belongs.

We want to own the companies that benefit from America’s growth. But we want to buy them when the business is understandable, and the price makes sense.

That combination is rare. That is why we do the work. We are not trying to own every famous company. We are trying to own the right businesses.

There is a big difference.

SpaceX may become an incredible public company. It may reward investors who accept the uncertainty. It may prove that Musk’s vision was right again.

I hope that happens. But hope is not our process. 

Our process is built on business quality, financial strength, management skill, and price discipline. That process keeps us focused when the market gets loud.

The SpaceX IPO is a great American story. But great stories do not always make great investments. 

The wealth is usually made in businesses that are easier to understand, easier to track, and easier to value. 

That is not as exciting as a rocket launch. It is much better for compounding.

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Regards,

Charles Mizrahi
Prosperity Insider