SpaceX (SPAX.PVT) just got slapped with a bearish valuation ahead of its monster IPO coming up later this month. The report signals that one of the most anticipated offerings in years may be significantly overpriced, just as CEO Elon Musk tries to justify the valuation.
Morningstar initiated coverage of SpaceX with a fair-value estimate of just $780 billion, less than half the roughly $1.8 trillion valuation the company is targeting in its initial public offering.
Analyst Nicolas Owens’s discounted cash flow model valued SpaceX’s core launch and Starlink satellite businesses at about $611 billion in enterprise value, plus an additional $170 billion in “probability-weighted scenarios” for the company’s AI operations.
Translation: Don’t buy at the IPO price.
“We think the company has been significantly overvalued and investors will have opportunities to buy the stock at more attractive levels after the IPO,” Owens said.
Morningstar’s valuation rests on the strength of the company’s launch and connectivity businesses. SpaceX launched 83% of the mass sent to orbit from Earth in 2025 and reduced launch cost per by more than 95%, Owens noted. Starlink, described as the company’s main near-term cash engine, reported 50% revenue growth to $11.3 billion in 2025 and operating income exceeding $4.4 billion.
Morningstar assigned SpaceX a narrow economic moat, citing the cost advantages of its reusable rockets and the scale of its Starlink constellation, but said the recently acquired AI business drags the rating down because its prospects and initiatives — like orbital data centers — are too uncertain.
Morningstar modeled three scenarios for SpaceX’s plan to place data centers in space, ranging from a “moonshot” case, which it values at $1.3 trillion but gives only a 7% chance, to a “no go” case that it assigns a 43% probability and that would destroy more than $81 billion in value.
“We think the most likely path to a durable edge for xAI is through its space-based infrastructure, but we are uncertain about the scientific and economic feasibility of such a plan,” Owens wrote.
The analysts also flagged governance concerns, including Musk’s expected 85% voting control through a dual-class structure and the related-party nature of the xAI merger, which was not conducted at arm’s length.
According to the Morningstar analysts, SpaceX is preparing to offer around 3% of its shares to the public after a series of private rounds, including a $250 billion deal in early 2026 to acquire xAI, Musk’s AI lab, which gave SpaceX a valuation near $1.5 trillion.
