SpaceX IPO Valuation: Morningstar Estimates $780 Billion Against $1.75 Trillion Target

Morningstar analysts have valued SpaceX at $780 billion, a figure that is less than half of the $1.75 trillion valuation the company is reportedly targeting for its initial public offering (IPO). The research firm suggests that while the stock may see near-term gains due to a low float and strong underwriting by major investment banks, long-term investors may find better entry points after the initial offering.

Valuation Gap and Market Expectations

SpaceX is targeting a valuation of $1.75 trillion for its IPO, with the stock scheduled to debut on the Nasdaq on June 12, 2026, following a roadshow starting June 4. For context, the company was recently valued at $1.53 trillion on the secondary trading platform Forge Global.

Morningstar equity analyst Nicolas Owens argues that the company is significantly overvalued at these levels. He suggests that the current target is detached from financial reality, stating that investors will have opportunities to buy the stock at more attractive levels following the IPO.

Key Risk Factors in AI and Infrastructure

Morningstar identifies several critical uncertainties that weigh down its lower valuation, specifically regarding the company's artificial intelligence and satellite infrastructure:

  • AI Business Uncertainty: The prospects for SpaceX's AI segment—which includes xAI and the social media platform X—are viewed as uncertain due to unclear economics and stiff competition from OpenAI and Anthropic. Analyst Nicolas Owens specifically noted, "We don't see Grok as one of the leading AI labs today."
  • Untested Technology: The future promise of the AI segment relies on speculative technology, such as orbital data centers, which Morningstar describes as untested.
  • Starlink Hurdles: While Starlink provides satellite broadband, it faces technological hurdles that may be outside the company's direct control.

Analysis of Market Sentiment and Index Inclusion

Industry observers and market participants have expressed a wide range of views on the valuation gap, ranging from skepticism to the reasoning behind high speculative premiums.

Skepticism of Fundamental Value

Many critics argue that the valuation is based on speculative future events rather than current GAAP revenue and profit. One observer noted that these valuations require "believing as many as six unlikely things before breakfast," suggesting that the error bars on future projections are too large to be reliable.

The "Moonshot" Investment Thesis

Some argue that the valuation reflects a probability-weighted bet on SpaceX becoming one of the largest companies in the world. This perspective suggests that a 10% chance of earning $10 trillion in the future justifies a high current valuation, similar to the early days of the Facebook IPO, where initial pricing was based on speculative growth rather than existing revenue.

Concerns Over Index Inclusion

There are concerns that the IPO is structured to facilitate rapid inclusion in major stock indexes. This would force pension funds and index funds to purchase shares regardless of the fundamental valuation, effectively shifting the risk to institutional investors.

Underwriting and IPO Timeline

The IPO is being underwritten by a consortium of major investment banks, including:

  • Goldman Sachs
  • Morgan Stanley
  • BofA Securities
  • Citigroup
  • J.P. Morgan

Despite the contrarian view from Morningstar, enthusiasm for the IPO remains high among retail investors and the broader market.

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