SpaceX Valuation Trails IPO Target by Over 50%, Morningstar Reports

SpaceX’s IPO: Analysts Sound Alarm on Sky-High Valuation Amidst Significant Losses

As Elon Musk’s SpaceX gears up for what is poised to be the largest initial public offering in history, a stark warning has emerged from Morningstar analysts. Despite the immense anticipation surrounding its Nasdaq debut, with the company reportedly aiming to raise $75 billion and achieve a valuation of $1.75 trillion, Morningstar asserts that SpaceX is “significantly overvalued.”

The investment research firm’s analysts, in a note published this week, expressed their belief that investors will have a more opportune moment to acquire SpaceX shares at a more attractive price point after the initial public offering. Their assessment highlights a considerable degree of uncertainty surrounding the potential profitability of SpaceX’s artificial intelligence venture, xAI. Morningstar views xAI’s “economic moat as indeterminate” and considers it a “material threat of value destruction” to the parent company.

Consequently, Morningstar’s discounted cash flow valuation for SpaceX stands at $780 billion, a figure that represents a substantial 48% discount to its current private market valuation of $1.5 trillion. This disparity underscores the analysts’ skepticism regarding the aggressive IPO valuation.

For retail investors, Morningstar advises that the upcoming IPO may not represent the optimal entry point. However, they suggest that patient, long-term investors keen on participating in SpaceX’s ambitious future will likely find opportunities later on, offering “a greater margin of safety” than available at the time of flotation.

Morningstar anticipates that the immediate aftermath of the IPO might see a surge in SpaceX’s stock price, driven by a confluence of factors. These include a limited initial float, broad support from investment banks, robust investor appetite for AI infrastructure, and an expedited path to inclusion in the Nasdaq 100 Index, a mere 15 trading days post-IPO.

Digging into SpaceX’s financials reveals a challenging picture. The company reported a net loss of $4.28 billion in its most recent quarter, following a loss of $4.94 billion in 2025. The Starlink satellite internet service remains the primary revenue driver, generating $3.26 billion in the latest quarter, accounting for 69% of total revenue. However, the broader space operations incurred an operating loss of $619 million, while the burgeoning AI division suffered a significant loss of $2.5 billion. This highlights Starlink as the sole profitable segment within the company.

Further compounding concerns, SpaceX’s S-1 filing explicitly states its “history of net losses and may not achieve profitability in the future.” A significant portion of the company’s valuation hinges on the successful development of technologies described as “novel and untested.” SpaceX projects “significant capital expenditures over a period of years” before its AI products and services can reach profitability, according to the filing.

Dan Coatsworth, head of markets at AJ Bell, pointed out the inherent opacity in the financials of a private company like SpaceX, where Elon Musk holds an 85% controlling stake in voting rights. He flagged the eye-watering valuation as a potential risk to sustained upside. “A $1.75 trillion valuation would put SpaceX on 67 times sales, three times as much as Nvidia’s rating based on its past financial year and latest share price,” Coatsworth noted, drawing a striking comparison to the semiconductor giant.

Amidst these financial and valuation concerns, speculation surrounding a potential merger between SpaceX and Tesla has also resurfaced, adding another layer of complexity to the narrative surrounding Elon Musk’s ambitious ventures.