Morningstar analysts valued SpaceX at $780 billion, less than half of the $1.75 trillion valuation the Elon Musk-led company is reportedly targeting in its planned initial public offering. The estimate provides a skeptical counterpoint ahead of SpaceX's expected IPO roadshow, with Morningstar arguing that the proposed valuation leaves limited room for execution risk. The gap between Morningstar's assessment and SpaceX's reported target has emerged as a focal point in early pricing debates, particularly as SpaceX was last valued at $1.53 trillion on secondary trading platform Forge Global—already far above Morningstar's view of fair value.
Morningstar Questions SpaceX AI Business Economics
Morningstar raised specific doubts about SpaceX's artificial intelligence business, which includes xAI and social media platform X. The research firm said the economics of the AI segment remain unclear, while competition from OpenAI and Anthropic limits the visibility of future returns. "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 pointed to untested technology such as orbital data centers, warning that the future promise of the AI segment relies on ideas that have not yet been proven at commercial scale. Those concerns place SpaceX in a different category from mature public technology companies with established AI revenue lines.
Starlink Faces Technological and Operational Hurdles
Starlink remains one of SpaceX's most important businesses because it gives the company a recurring revenue story beyond rocket launches. Morningstar flagged technological hurdles at Starlink, including some that may be outside the company's control. Satellite broadband depends on spectrum access, network density, terminal economics, launch cadence, orbital capacity, regulatory approvals, and competitive pressure from terrestrial and satellite rivals. Morningstar's warning suggests the satellite broadband business may not remove enough risk from the investment case. Instead, it may add another layer of execution pressure because Starlink must deliver both operational growth and financial proof at a scale that matches the valuation.
Underwriters May Support Near-Term Trading Despite Valuation Concerns
Morningstar said SpaceX shares could still rise in the near term because of a low float and the strength of the investment banks underwriting the offering. Goldman Sachs, Morgan Stanley, BofA Securities, Citigroup, and J.P. Morgan are among the underwriters for the share sale. A limited float can support early trading by restricting supply, especially when demand from institutions and retail investors is high. Owens said investors may get better entry points after the IPO. "We think the company has been significantly overvalued and investors will have opportunities to buy the stock at more attractive levels after the IPO," he said. He added that long-term investors interested in SpaceX's future may be able to participate later "with a greater margin of safety than the initial offering is likely to provide."
FAQ
What valuation did Morningstar assign to SpaceX?
Morningstar analysts valued SpaceX at $780 billion, less than half of the $1.75 trillion valuation the company is reportedly targeting in its planned initial public offering.
Why does Morningstar question SpaceX's AI business?
Morningstar raised doubts about the economics of SpaceX's artificial intelligence segment, which includes xAI and platform X. Analyst Nicolas Owens stated that competition from OpenAI and Anthropic limits visibility of future returns, and pointed to untested technologies such as orbital data centers that have not yet been proven at commercial scale.
Which investment banks are underwriting the SpaceX IPO?
Goldman Sachs, Morgan Stanley, BofA Securities, Citigroup, and J.P. Morgan are among the underwriters for the share sale.
