- SpaceX is targeting a valuation of at least $1.8 trillion, as per reports.
- Research firm Morningstar has pegged the firm’s valuation at $780 billion.
- Morningstar analysts feel investors may be able to buy SpaceX stock at more attractive levels after the
Elon Musk's SpaceX is set for what many anticipate to be a blockbuster initial public offering (IPO). However, before the rocket maker launches its public issue, questions are emerging over the company's valuation.
SpaceX is targeting a valuation of at least $1.8 trillion and aims to raise $75 billion via its public issue, Bloomberg reported. However, analysts from research firm Morningstar have pegged the firm's valuation at $780 billion, less than half of what SpaceX is targeting.
The research firm noted that prospects for SpaceX's artificial intelligence business, which includes xAI and social media platform X, were uncertain taking into account unclear economics and competition from Anthropic and OpenAI.
Referring to the chatbot developed by xAI, Morningstar equity analyst Nicolas Owens said, “We don't see Grok as one of the leading AI labs today.”
He also warned that the future promise of SpaceX's AI segment is based on untested technology like orbital data centres, as per Reuters. The company's satellite broadband business, Starlink, also faces technological hurdles, many of which might be outside SpaceX's control, as per Owens.
"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 added.
The analysis stands in stark contrast to the enthusiasm shown for the SpaceX IPO.
Morningstar predicted that SpaceX's stock could rise in the near term, given the low float as well the strong cadre of major investment banks- including Goldman Sachs, Morgan Stanley, Citigroup and BofA Securities - underwriting the IPO.
But, long-term investors who are eager to take part in SpaceX's future endeavors and potential success will get chances to do “with a greater margin of safety than the initial offering is likely to provide," Owens said.
SpaceX's last market valuation was $1.53 trillion on secondary trading platform Forge Global. The rocket maker plans to hold a roadshow on June 4. The stock is expected to start on Nasdaq on June 12.
SpaceX recorded a net loss of $4.28 billion in the latest quarter. Its Starlink business generated $3.26 billion in revenue, making up 69% of the total. Its space arm lost $619 million on an operating basis. SpaceX's AI unit lost $2.5 billion.
