SpaceX plans a Nasdaq initial public offering this month that could become the largest in history [1, 2].
The move would transition the private aerospace giant into a public company, but analysts warn that the current pricing may be unsustainable for new shareholders.
Morningstar said the IPO is overvalued by roughly half [2, 3]. The firm's fair-value estimate for the company is $780 billion [3], while the target IPO valuation is between $1.75 trillion [2] and $1.77 trillion [4].
According to filings, SpaceX intends to offer 555.6 million shares at a proposed price of $135 per share [4]. This pricing structure would result in a market valuation of $1.77 trillion [4]. The company expects to raise up to $75 billion through the offering [5].
Morningstar said significant valuation risks tied to xAI, the AI subsidiary of SpaceX, are a primary concern [3]. The analysts also pointed to an indeterminate economic moat—a term describing a company's ability to maintain competitive advantages—as a reason for the lower valuation estimate [3].
Because the IPO price is approximately twice the fair-value estimate, Morningstar said smart investors should wait out the initial hype [2]. The firm said that better entry points may emerge after the IPO once insiders begin to sell their holdings [1, 3].
SpaceX is headquartered in Hawthorne, California, and is led by Elon Musk [1, 5]. The company's transition to the Nasdaq exchange would mark a pivotal shift in how the public accesses the commercial space industry [1].
“Morningstar said the IPO is overvalued by roughly half”
A valuation gap of nearly $1 trillion between analyst estimates and the company's target price suggests a high risk of a post-IPO price correction. If the market agrees with Morningstar's assessment of xAI's risks and the company's competitive moat, the stock could see significant volatility shortly after its debut on the Nasdaq.
