Morningstar analysts have placed a valuation of $780 billion on SpaceX, a figure that is less than half of the $1.75 trillion valuation the company is targeting in its planned initial public offering. The research note underscores reservations about the economics and competitive prospects of SpaceX’s artificial intelligence business, which encompasses xAI and the social media platform X.
The firm called out unclear financial metrics and direct competition from established AI rivals as reasons to temper expectations for the division. "We don’t see Grok as one of the leading AI labs today," Morningstar equity analyst Nicolas Owens said, referring to the chatbot developed by xAI.
Owens also cautioned that much of the future potential attributed to SpaceX’s AI efforts rests on unproven concepts, including the use of orbital data centers - a technology that has not been validated at scale. The analyst added that Starlink, SpaceX’s satellite broadband arm, faces its own set of technological challenges, many of which may lie beyond the company’s control.
Reflecting these concerns, Morningstar concluded that the company appears significantly overvalued at current expectations, and that investors are likely to find more attractive entry points after the IPO. At the same time, the firm acknowledged there could be short-term price strength given the anticipated low public float and the involvement of major investment banks as underwriters.
SpaceX is planning a roadshow that is expected to begin on June 4, with a Nasdaq listing scheduled for June 12. The offering is being underwritten by a group that includes Goldman Sachs, Morgan Stanley, BofA Securities, Citigroup and J.P. Morgan. The company was most recently valued at $1.53 trillion on the secondary trading platform Forge Global.
Context for investors
- Morningstar’s $780 billion valuation contrasts sharply with SpaceX’s $1.75 trillion IPO target and its $1.53 trillion secondary-market valuation.
- The research note identifies unclear economics for AI operations and competitive pressure from major AI labs as key limitations on upside.
- Near-term market dynamics - including a small public float and top-tier underwriters - could push the stock higher around the offering despite longer-term valuation concerns.
What remains uncertain
- The economic model for SpaceX’s AI businesses is not clearly defined in Morningstar’s assessment.
- Technologies cited as drivers of future growth, such as orbital data centers, are untested and therefore speculative from an operational perspective.
- Starlink’s technical hurdles may be impacted by factors outside the company’s control, adding execution risk for the satellite broadband segment.
Owens summed up the position by noting that while short-term market mechanics could lift the stock, long-term investors who want exposure to SpaceX’s potential might find better opportunities to buy at lower prices after the IPO.