This research firm says SpaceX is worth less than half its IPO target

Morningstar analysts pegged SpaceX‘s valuation at US$780 billion, less than half the US$1.77 trillion ($2.3 trillion) that the Elon Musk’s company is targetting.

Bengaluru - SpaceX just set a price for its initial public offering that would make it the largest ever, but one research firm has warned that Elon Musk’s rocket and AI behemoth is “significantly overvalued.”

Morningstar analysts pegged SpaceX‘s valuation at US$780 billion (S$1 billion), less than half the US$1.77 trillion ($2.3 trillion) that the company is targetting with its US$135 per share IPO.

Prospects for the company’s artificial intelligence business, which includes xAI and social media platform X, were uncertain given unclear economics and competition from OpenAI and Anthropic, the research firm said.

“We don’t see Grok as one of the leading AI labs today,” said Morningstar equity analyst Nicolas Owens, referring to the chatbot developed by xAI.

Owens also warned that the future promise of SpaceX‘s AI segment relies on untested technology such as orbital data centres. Starlink, the satellite broadband business, also faces technological hurdles, many of which may be outside the company’s control, he said.

“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.

The warning stands out as a rare contrarian view at a time when enthusiasm for the IPO has been high.

Most companies that go public set a preliminary price range for their stock offering before settling on a final number in case investor demand for their shares changes. But Musk and SpaceX sidestepped that and simply declared one price for investors, the New York Times noted. SpaceX could still change that price but is not expected to do so, the newspaper added.

Its current valuation of US$1.77 trillion from its IPO price would be more than 40 per cent higher than the US$1.25 trillion that SpaceX valued itself at in February. The company was also last valued at US$1.53 trillion on secondary trading platform Forge Global.

SpaceX is aiming to launch a roadshow on June 4, with the stock scheduled to debut on the Nasdaq on June 12.

Morningstar said the stock could ascend in the near term, given the low float and the strong cadre of major investment banks underwriting the IPO.