Opinion: SpaceX Boosts Pre-IPO Valuation Using Non-GAAP Metrics, True Value Difficult to Determine Accurately

BlockBeats News, May 23rd. SpaceX recently filed for an IPO, with its mission statement being: "To establish the systems and technologies necessary for life to become a multi-planetary species, to understand the true nature of the universe, and to extend the light of consciousness to the stars." Behind this grand narrative, business ultimately returns to measuring enterprise value with money. Retail investors are often the initial target of stock sales after an IPO, aiming to acquire shares at a fixed price. Insiders hope to drive up the stock price through market hype post-IPO to sell off some of their shares at a profit.

According to Nasdaq disclosure data, the percentage of loss-making companies in IPOs has increased from 20% to 80% of the total annual number since the 1980s. Nearly two-thirds of companies underperform the market three years after an IPO, with most (64%) lagging by over 10%. While some companies perform well in the long term and some loss-making companies eventually become profitable, it is very challenging to accurately price new IPOs and assess their investment value. Many companies are increasingly using non-GAAP terms that do not comply with US GAAP accounting standards.

Although non-GAAP metrics are sometimes useful, they are often used to make companies appear more valuable. SpaceX also uses "adjusted EBITDA" (Earnings Before Interest, Taxes, Depreciation, and Amortization). This means that the financial data disclosure considers only net income or loss, excluding depreciation and amortization, share-based compensation, impairments, restructuring expenses, interest expenses, and income. This ultimately presents a figure that is much higher than the actual GAAP net profit. This allows companies to show investors an image of "our operations are actually very healthy and strong if you don't consider these disturbances," especially suitable for growth enterprises like SpaceX with heavy assets, large early investments, and yet to achieve high profits, making it easier to gain market recognition and higher valuation at the IPO.