I’m way out of my depth in suggesting this idea, so forgive me if I’m committing a conceptual “divide by zero” and it’s not even wrong:

It seems like the SpaceX IPO really breaks the traditional notion of market cap.

Market cap has an unstated assumption that most of a company’s stock could, in theory, be traded unencumbered. Thus shares * price gives a very rough view of the value of the company. Everyone understands that this valuation has problems: it attributes the last marginal trade to the entire stock, and doesn’t account for large purchases/sales. But it’s useful nonetheless.

But with SpaxeX, only a tiny fraction of those shares are even theoretically tradeable, so it seems bizarre to calculate valuation using price * shares. I think this is the source of discomfort around the $2T market cap.

It seems like, similar to how there are long and short term liabilities, there should be long and short term market caps.

“Short term market cap” would be price * “number of shares that could theoretically be available for trade within the next year”, from all sources (including vesting employee options, expiring lockups, etc).

“Long term market cap” would be price * total authorized shares.

So SpaceX’s long term market cap would remain at $2T and its short term market cap would be, say, 5% of that (about $100B).

Market cap has been that sort of fiction from the beginning. It's never been a terribly useful number. There's really no fixing it because the only way to "truly" value a company is to sell it, for real, on the open market. Anything else is just a guess. More or less educated, but a guess. SpaceX isn't creating this problem or making it particularly worse.

What you are describing is what's called free float market cap and is generally what market indices use to weigh stocks. That way you're only trying to replicate the market of stocks that are actually available to trade. There's nothing new about SpaceX in that respect, plenty of companies have float much lower than their total.

You're not wrong, but the weakness you point out isn't a new concept.

Market cap is, at best, a rough valuation of the company. It has many confounding variables of which liquidity can be one of them. That's part of why investment analysts put out price targets for companies. The counterpoint is that market price is driven by what people are actually paying.

One of the major challenges with valuation is settling on a methodology overall. There are many ways, appropriate and not, to value a company. Many will have different estimates for value. There are also factors, like control premium, that start to become relevant when you try to completely acquire a company.

One of the benefits of an open and liquid market is that future availability of locked shares can be priced in early. We all get the benefit of consensus information.

Nah, it's fairly common for only a relatively small part of a company to be tradeable.

No, shares are shares. Public or not.

Different classes of shares are possible, as are other time-varying schemes such as warrants. But that's not what Musk did. The shares all have the same class.