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Morningstar cuts the company value to $780 billion, exposing a huge gap.
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SpaceX is worth less than half of its $1.75 trillion IPO target, Morningstar says
“SpaceX is expected to start trading on the Nasdaq in just over two weeks, but Morningstar analysts have warned that Elon Musk’s tech behemoth is “significantly overvalued.”
The hotly-anticipated debut is expected to be the largest ever initial public offering, with SpaceX reportedly targeting a $75 billion fundraise and a valuation of $1.75 trillion.
“We think the company has been significantly overvalued and investors will have opportunities to buy the stock at more attractive levels after the IPO,” Morningstar analysts wrote in a note published Monday.
The analysts see a wide range of possibilities for the potential profitability of SpaceX’s xAI and find its “economic moat indeterminate.” They view the unit as posing a “material threat of value destruction” to the company.
As such, Morningstar’s discounted cash flow valuation of SpaceX is $780 billion, which is roughly 48% below its private market valuation of $1.5 trillion.
Morningstar said the upcoming IPO does not offer the best entry point for retail investors. However, long-term investors eager to participate in the company’s potential future success will have more opportunities later down the line, with “a greater margin of safety” than at the time of flotation, the analysts added.”