SpaceX is set to take its Falcon 9-sized leap to the public markets this month in what Elon Musk has said could become the largest initial public offering in history.
But there is a problem.
Morningstar just released a fair value estimate on the company $780 billion. That’s less than half of the roughly $1.8 trillion Musk is reportedly targeting.
In other words, one of Wall Street’s most prestigious research firms thinks SpaceX investors are going to pay over a trillion dollars.
Here’s how Morningstar analyst Nicholas Owens put it in a research note this week, according to Yahoo Finance cnbc.
What is the company really worth?
Owens used a discounted cash flow model – basically estimating future cash and discounting it into today’s dollars. Their numbers for SpaceX’s core businesses came out to about $611 billion.
This includes Launch Business and Starlink. Both are real. Starlink alone generated $11.3 billion in revenue last year, a 50% increase over 2024. And SpaceX launches 83% of the mass sent into orbit from Earth in 2025.
So the side of meat and potatoes is really impressive.
Problem? Musk recently merged xAI – his artificial intelligence venture – into SpaceX in a $250 billion related-party deal that was conducted with no arm’s length. This increased SpaceX’s private valuation to approximately $1.5 trillion.
Morningstar projects an additional $170 billion for the AI business in probability-weighted scenarios. But Owens flagged this as a potential hurdle, calling its prospects too uncertain to price with confidence and warning that AI bets pose a real risk of destroying shareholder value.
Quit immediately – Most internet financial advice comes from people who weren’t alive during the last recession. I’ve been writing about money for over 35 years. Do you want concrete advice? Sign up for the free Money Talks newsletter. It takes 10 seconds. No sparkles. no spam.
governance red flag
There’s one more thing worth noting buried in the IPO documents.
According to Morningstar, Musk will walk away with about 85% of the voting power through a dual-class share structure — even though only 3% of SpaceX shares are being offered to the public.
In plain English: You have to bet on the company. He holds the steering wheel.
This is not unusual for tech IPOs. Mark Zuckerberg has a similar setup at Meta. But here it matters.
If Musk decides to bet billions on space-based AI data centers — which Morningstar gives just a 7% chance of paying off — there’s not much anyone can do about it.
What should investors really do?
This is where I want to be direct.
I’ve seen these “biggest IPOs ever” stories for 35 years. The pattern is frustratingly consistent: hype, first-day pop, lock-up period that expires, insiders cash out, and the stock drops.
The Tesla parallel cuts both ways. Yes, Tesla is now worth over $1.3 trillion. But anyone who bought it on hype rather than fundamentals has encountered some stomach-churning shortcomings along the way.
Morningstar’s advice for SpaceX is the same advice I gave readers years ago about Facebook’s IPO: Wait. Owens bluntly said the company is “significantly overvalued” – and patient investors will find better entry points once the post-IPO hype subsides.
If you really want a piece of Musk’s space empire – and it’s a real case that the underlying business is excellent – then patience will probably reward you. Just make sure any one bet remains a small part of an appropriately diversified portfolio.
Don’t be the one paying $1.8 trillion for a $780 billion business.