SpaceX is worth less than half of its $1.75 trillion IPO target, Morningstar says

As SpaceX gears up for its highly anticipated Nasdaq debut in just over two weeks, analysts from Morningstar have raised concerns about the company's valuation. Expected to be the largest initial public offering in history, SpaceX aims to raise $75 billion and reach a staggering valuation of $1.75 trillion. Morningstar's analysts believe that the current valuation is "significantly overvalued," stating that investors might find better buying opportunities post-IPO. Their analysis reveals a wide range of estimates regarding the profitability of SpaceX's xAI division, with the analysts describing its economic moat as "indeterminate" and warning of potential value destruction. According to their discounted cash flow analysis, SpaceX's valuation should be around $780 billion, which is approximately 48% lower than its private market valuation of $1.5 trillion. Morningstar advises that the upcoming IPO may not provide the best entry point for retail investors, but suggests that long-term investors could find more favorable conditions later, with greater safety margins. The analysts predict that despite a small initial share float and strong investor interest in AI infrastructure, SpaceX’s stock might experience an initial rise after the IPO. However, they caution that the company recently reported a net loss of $4.28 billion, following a $4.94 billion loss in 2025. Notably, its Starlink division generated $3.26 billion in revenue, constituting 69% of total revenue, while the space segment recorded an operating loss of $619 million and the AI unit lost $2.5 billion. Crucially, SpaceX's S-1 filing indicated a history of net losses and uncertainty about future profitability. The company's valuation largely hinges on the successful development of various new technologies, which are still in untested phases and are expected to require significant capital investment over the coming years. Dan Coatsworth, head of markets at AJ Bell, pointed out the opacity of SpaceX's financial details, attributed to its private company status and Elon Musk's control of 85% of voting rights. He noted the risks associated with such a high valuation, emphasizing that a $1.75 trillion figure would place SpaceX at 67 times its sales, considerably higher than Nvidia's valuation. Amidst this backdrop, speculation has re-emerged regarding a potential merger between SpaceX and Tesla, adding another layer of intrigue to the unfolding story of this ambitious tech giant.