As investors prepare for what could become the largest initial public offering in history, independent research firm Morningstar is throwing cold water on SpaceX's expected valuation, arguing the Elon Musk-led company is worth roughly $780 billion, nearly 50% below the anticipated IPO valuation of approximately $1.5 trillion to $1.75 trillion.
In a comprehensive analysis released ahead of SpaceX's highly anticipated public debut, Morningstar concluded that while SpaceX remains one of the world's most innovative and successful companies, investors may be dramatically overestimating the value of its future prospects.
The research firm said its discounted cash flow analysis values the company at $780 billion, about 48% below its latest private-market valuation.
Morningstar nevertheless assigned SpaceX a narrow economic moat rating, citing the company's dominant position in launch services and Starlink satellite communications.
However, analysts warned that the recently acquired AI business introduces substantial uncertainty and could ultimately destroy shareholder value if expectations fail to materialize.
The IPO is expected to raise between $50 billion and $80 billion, valuing the company at as much as $1.75 trillion.
SpaceX would immediately become one of the world's largest publicly traded companies and could be fast-tracked into major stock indexes, creating significant demand from passive investment funds.
Starlink Drives Value, Not AI
Morningstar's analysis argues that investors should focus on SpaceX's proven businesses rather than ambitious projections surrounding artificial intelligence and orbital computing.
The firm's analysts found that Starlink remains SpaceX's primary cash-generation engine, producing more than $11 billion in revenue and approximately $4.4 billion in operating income in 2025.
They project Starlink could grow to $56 billion in annual revenue by 2035, while direct-to-cell satellite services could add another $24 billion annually.
By contrast, Morningstar described the outlook for SpaceX's AI operations as highly uncertain.
The company acquired Musk's xAI business earlier this year, including the Grok chatbot, X social media platform, and the Colossus AI data center project.
While Morningstar sees potential for orbital data centers powered by solar energy in space, it assigns a wide range of outcomes and notes the concept remains largely unproven.
The firm's "moonshot" scenario gives only a 7% probability to a highly successful orbital AI business, while its base case assumes SpaceX eventually captures only about 4% of global AI computing capacity.
Questions About Valuation
A key part of SpaceX’s revenue streams will flow from its deal with AI giant Anthropic.
In its SEC filing, SpaceX said it had signed a 3-year deal with Anthropic to lease its Colossus data center in Tennessee for $45 billion.
However, in a recent X post, Musk wrote, “SpaceX has not committed to leasing Colossus for years,” and called the pact a “180 day lease with 90 day notice mutual cancellation thereafter.”
Financial commentator and hedge fund manager Patrick Boyle has been even more skeptical, questioning both the valuation and the structure of the offering.
Boyle noted that SpaceX is seeking a valuation of roughly 125 times annual sales, an extraordinarily high multiple even by technology-sector standards.
He contrasted that figure with Google's IPO, when the search giant was growing revenue by approximately 240% annually and debuted at around 10 times sales.
"The question isn't whether it's a good or a bad company," Boyle said. "A bad company can be a good investment if you get in at a low enough price, and an amazing company can be a terrible investment if you overpay for the stock."
Boyle also questioned whether investor enthusiasm for Musk and anticipated index inclusion could create a speculative frenzy detached from fundamentals.
"The expectation is that the indexes will be buying 15 days later," Boyle said. "That would essentially mean that there's just a frenzy of it being bought up and stuffed into the portfolios of people who index."
Some indexes have changes ruled to give SpaceX and early footing on their list – ensuring billions of dollars in stock purchases by ETF and automatic trading programs.
The Nasdaq move to change its rules for new major companies to be listed on the Nasdaq-100 only after 15 trading days. Similarly, the FTSE Russell announced a new early entry for SpaceX.
The giant S&P Dow Jones indices announced this week it will not change its requirement, which include a one-year waiting period and profitability thresholds to join.
In a lengthy review of SpaceX's prospectus, Boyle highlighted concerns about the company's aggressive AI ambitions, governance structure, heavy capital spending requirements, and dependence on the successful commercialization of Starship.
He argued that much of the proposed valuation appears tied to future AI opportunities that remain uncertain and unproven.
A Great Company, But Is It a Great Stock?
Despite its skepticism on valuation, Morningstar remains highly positive about SpaceX's underlying businesses.
Analysts praised the company's dominant launch economics, reusable rocket technology, and Starlink's unique competitive advantages.
The firm believes SpaceX has established a durable cost advantage in space transportation and satellite communications that competitors may struggle to match for years.
It also sees substantial long-term growth opportunities across launch services, broadband connectivity, and direct-to-cell communications.
Still, Morningstar's conclusion is clear: SpaceX may be one of the world's most successful companies, but investors could face significant downside risk if they buy at the anticipated IPO valuation.
"We think long-term investors eager to participate in SpaceX's future endeavors and potential success will have opportunities to do so with more margin of safety than the initial offering is likely to provide," Morningstar wrote.
For investors weighing whether to participate in what may become the largest IPO ever, the debate increasingly appears to center not on whether SpaceX is a remarkable company, but whether the market is asking too high a price for that success.