By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
The panel consensus is bearish on SpaceX's current valuation, with key concerns being extreme overvaluation, execution risk, and governance issues. The near-term float dynamics may initially boost the stock, but long-term prospects hinge on successful execution of multiple projects and favorable regulatory environments.
Risk: Regulatory headwinds for Starlink and the capital intensity required to maintain orbital exclusivity.
Opportunity: Potential upside from Starlink internationalization, Starship cadence improvements, and xAI monetization.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
The hype around SpaceX’s blockbuster IPO has been near-impossible to ignore.
The company set a fixed price of $135 per share, is targeting a record $75 billion raise on the Nasdaq under the ticker SPCX, and is scheduled to debut on June 12, making it the largest initial public offering in history, more than double Saudi Aramco’s 2019 record of $29 billion.
But one of Wall Street’s most respected independent research firms just issued a warning that investors should not overlook.
Morningstar initiated its first-ever coverage of SpaceX this week and arrived at a fair value estimate of $780 billion, roughly 55% below the company’s $1.75 trillion IPO target.
The firm’s lead equity analyst, Nicolas Owens, didn’t soften the message: “We think the company has been significantly overvalued and investors will have opportunities to buy the stock at more attractive levels after the IPO,” CNBC reports.
Morningstar’s math: where the $780 billion comes from
Owens built his valuation using a Discounted Cash Flow (DCF) model, a method that estimates a company’s value based on how much cash it is realistically expected to generate over time.
A DCF model works backward from future projections, discounting them to reflect uncertainty; a higher uncertainty means a lower present value.
He assigned SpaceX’s core launch business and Starlink satellite broadband unit a combined enterprise value of approximately $611 billion.
Starlink deserves much of that credit.
The satellite internet division posted $11.3 billion in revenue in 2025, a 50% year-over-year increase, with operating income exceeding $4.4 billion, TradingKey reports.
Morningstar also gave SpaceX credit for its launch dominance.
The company accounted for 83% of all mass sent to orbit from Earth in 2025 and has reduced launch costs per kilogram by more than 95%, Morningstar notes.
Owens then applied probability-weighted scenarios to SpaceX’s AI segment, the one acquired through its all-stock merger with Elon Musk’s xAI company in February 2026.
That deal was the largest corporate merger by valuation in history, creating a combined entity worth $1.25 trillion.
The AI component added only $170 billion to Morningstar’s total, producing a blended fair value of $780 billion.
The implication: Morningstar believes the market is pricing SpaceX’s AI ambitions far too generously, based on the actual evidence available today.
The three key reasons Morningstar sees AI as a drag:
xAI posted an operating loss of $6.36 billion in 2025, pulling SpaceX’s net loss for the year to $4.94 billion, despite $18.67 billion in combined revenue.
Owens flagged orbital data centers, one of SpaceX’s headline AI ambitions, as carrying “high uncertainty regarding scientific and economic feasibility.”
Morningstar concluded that it does not see Grok, xAI’s chatbot, as one of the leading AI labs competing against OpenAI and Anthropic today.
What the valuation gap looks like in practice
At the $1.75 trillion IPO target, SpaceX would be trading at approximately 94 times its 2025 revenue of $18.67 billion, TechTimes reports.
For context, Nvidia, one of the most profitable technology companies in the world, trades at roughly 22 times trailing revenue.
Owens labeled SpaceX shares “overvalued in almost any scenario, at least in the near term.”
He noted that sustaining a $1.75 trillion valuation through 2030 would require annual revenues exceeding $100 billion, with compound annual growth above 40%, according to Goldman Sachs data cited by TradingKey.
ARK Invest, led by Cathie Wood, holds a far more optimistic view.
Yahoo Finance previously reported that Wood projected SpaceX could reach a $2.5 trillion enterprise value by 2030, calling the IPO target “grounded in a plausible trajectory” for Starlink, Starship, and orbital AI.
That is a direct disagreement between two credible sources, and investors need to decide which framework fits their risk tolerance.
Governance risk compounds the picture
Morningstar’s concerns stretch beyond the balance sheet.
Owens flagged Musk’s expected 85% voting control through a dual-class share structure, meaning retail investors who buy SPCX will have virtually no say in how the company is run.
The xAI merger was also not conducted at arm’s length.
Musk both negotiated and approved a deal that transferred his own AI company into SpaceX, a governance structure Morningstar flagged as a “material threat of value destruction.”
Danish pension fund AkademikerPension placed SpaceX on its investment blacklist, stating that SpaceX’s governance structure is “catastrophic,” Bloomberg reports.
What happens to the price after the IPO
Here is where Morningstar’s note becomes practically useful for ordinary investors.
The firm acknowledged that SpaceX’s stock is likely to hold steady or even climb in the days immediately following the listing.
But this is for reasons that have nothing to do with the company’s underlying value.
According to Yahoo Finance, SpaceX is offering only about 4% of its shares to the public in this IPO, an unusually small float.
Nasdaq’s fast-entry rules also make SPCX eligible for Nasdaq-100 index inclusion after just 15 trading days, which would force passive funds to buy the stock automatically, regardless of valuation.
Limited supply plus forced demand equals short-term price support.
The real test comes months later.
SpaceX’s lockup structure is notably different from a standard IPO.
Rather than a single 180-day lockup for insiders, the prospectus allows existing shareholders to sell 20% of their holdings as early as the first quarterly earnings report.
Selling rights then step up at 70, 90, 105, 120, and 135 days post-IPO, Fortune reports.
That staggered release means the float will expand steadily through the end of 2026, creating windows where sellers could outpace buyers.
Owens’ guidance: wait for the post-IPO excitement to settle and watch for the stock to drift toward a more defensible valuation as additional supply enters the market.
Before buying SPCX on day one, consider these signals to watch:
Starship payload delivery timeline: SpaceX’s prospectus targets commercial launches in the second half of 2026; delays would pressure the growth thesis.
xAI revenue visibility: Until xAI posts operating profit, the $170 billion AI valuation Morningstar assigned rests on probabilities, not performance.
Lockup expiration dates: The first insider sell window opens with second-quarter earnings, likely in August, and that is where the real price discovery begins.
Investing personality Jim Cramer, who addressed the SpaceX deal on CNBC’s “Mad Money,” said he “cannot fully sign off” on the deal at the current valuation, despite seeing three potential near-term catalysts.
Bank of America strategist Michael Hartnett has also raised concerns, warning that SpaceX, OpenAI, and Anthropic landing in the same quarter could push tech concentration in the S&P 500past the 48% threshold that has historically preceded market bubbles.
Morningstar’s $780 billion fair value is not a prediction that SpaceX will fail.
It is a methodical argument that the gap between the company’s current fundamentals and its IPO price is too wide to ignore.
Long-term investors who buy before the excitement subsides may be paying today for returns that belong to 2030, and only if everything goes right.
Four leading AI models discuss this article
"The current SPCX price prices in massive optionality, but any sustained delay in Starlink monetization, Starship cadence, or xAI profitability would materially reprice the stock down from Morningstar's fair value."
Morningstar’s note flags legitimate risks, but the obvious takeaway—that SpaceX is wildly overvalued at a 1.75 trillion target—may be overstated. The strongest counterpoint is optionality: if Starlink internationalizes and monetizes beyond current assumptions, if Starship cadence improves margins, and if xAI monetization follows a path to profitability, the upside could compress the timing gap that Morningstar highlights. The bet hinges on execution across three engines (Starlink, Starship, xAI), plus governance dynamics that could either dampen or accelerate value. The near-term risk is the IPO mechanics—low float, quick index inclusion, and staggered insider sells—which can intensify volatility even if long-run prospects look solid.
The countercase is that SpaceX's upside is not a sure thing: Starlink growth may stall due to regulation or competition, and xAI profitability may never materialize on the assumed timeline, meaning the upside embedded in SPCX is far less certain than the article suggests.
"The IPO’s thin float and forced index buying create a synthetic price floor that will inevitably collapse as staggered lockup expirations flood the market with insider supply."
The $1.75 trillion valuation is a classic 'story stock' trap. Trading at 94x trailing revenue, SpaceX is priced for perfection in sectors—specifically orbital AI and Starship commercialization—where execution risk is extreme. Morningstar’s $780 billion fair value is arguably generous if you strip out the xAI 'synergy' premium, which currently functions as a capital sink rather than a revenue engine. The governance structure is the real red flag; an 85% voting block renders minority shareholders mere spectators to Musk’s capital allocation whims. While the 4% float and Nasdaq-100 inclusion will force short-term index buying, the staggered lockup expirations starting in August will likely trigger a brutal supply-demand imbalance.
If Starship achieves rapid, full reusability, launch costs could drop enough to unlock an entirely new orbital economy, rendering current revenue multiples obsolete by creating demand that does not exist today.
"SpaceX is overvalued at IPO but the 4% float and Nasdaq-100 mechanics guarantee short-term support; the real test is whether Starship commercialization and xAI profitability materialize before the staggered lockup unlocks 20% of insider shares in August 2026."
Morningstar's $780B valuation vs. $1.75T IPO target is methodologically sound but hinges on two fragile assumptions: (1) xAI's $170B component relies on unproven orbital data centers and Grok's competitive positioning, and (2) the DCF discounts Starship's payload economics before commercial launches materialize. The governance risk is real but priced into every Musk-led venture. The article correctly identifies near-term float dynamics as bullish (4% float + Nasdaq-100 inclusion), but undersells the possibility that Starlink's $11.3B revenue at 50% YoY growth justifies a $400-500B standalone valuation—making the $780B floor defensible even if AI adds nothing.
Morningstar's DCF may be anchored to 2025 financials that predate Starship's first commercial payload delivery; if Q3-Q4 2026 demonstrates unit economics that support $50B+ Starlink revenue by 2028, the $1.75T target becomes rational, not speculative.
"The IPO price embeds AI expectations that current losses and feasibility doubts cannot support once lockups begin releasing shares."
Morningstar's $780B DCF on SpaceX correctly flags that the $1.75T IPO target prices in unrealistic AI upside while xAI's $6.36B operating loss already drags 2025 results. The 4% float plus Nasdaq-100 inclusion will create artificial demand for SPCX in the first 15-30 days, but the staggered lockup schedule starting at Q2 earnings means supply ramps quickly. At 94x 2025 revenue the multiple is unsustainable versus Nvidia's 22x, and Musk's 85% voting control adds governance risk not captured in the model.
Starship achieving routine high-cadence launches by late 2026 could cut Starlink costs further and unlock exponential subscriber growth that Morningstar's probability-weighted scenarios undervalue, potentially closing the gap to $1.5T+ even without immediate AI profits.
"Regulatory/licensing headwinds for Starlink could slow international growth, undermining revenue assumptions and compressing the upside to the 1.75T target."
New risk not adequately stressed: regulatory/licensing headwinds for Starlink in major markets could slow international growth, undermining Starlink revenue assumptions (e.g., Claude's $11.3B revenue path). If approvals lag, the revenue trajectory weakens, compressing the implied upside of the SPCX thesis and making the 1.75T target even more dependent on later xAI monetization and favorable financing terms. This adds a time risk to the governance concern Gemini emphasized.
"The valuation is less about revenue multiples and more about the capital intensity required to maintain an insurmountable launch cost advantage."
Gemini and Grok are fixated on the 94x revenue multiple, but this ignores the 'moat' of orbital exclusivity. If Starship achieves full reusability, the barrier to entry for competitors becomes infinite, not just high. The real risk isn't the multiple; it's the capital intensity required to maintain that lead. If Musk pivots to aggressive debt financing to fund Starship's cadence, interest rate sensitivity becomes the primary threat to the $1.75T valuation, not just governance.
"Debt risk is secondary to execution risk; regulatory delays to Starlink international expansion are the binding constraint on the $1.75T thesis."
Gemini's debt-financing risk is underexplored but inverts the real problem. SpaceX has $10B+ cash; the constraint isn't capital access but Starship's actual launch cadence. If reusability misses timelines by 12-18 months, debt servicing becomes irrelevant—the revenue simply doesn't materialize. ChatGPT's regulatory risk for Starlink is the sharper needle: India, EU, and UK approvals are already stalling. That's a 2026-2027 headwind, not speculative.
"Regulatory delays accelerate cash burn, making Gemini's debt risk material well before Starship economics can offset it."
Claude correctly flags Starship cadence as the binding constraint, yet this directly validates Gemini's debt warning rather than dismissing it. Starlink's international regulatory stalls mean the $10B+ cash pile depletes faster on R&D without offsetting revenue, forcing external financing by 2027 even if Q3 2026 tests succeed. That timeline mismatch turns governance risk into a capital-structure problem the DCF models ignore.
The panel consensus is bearish on SpaceX's current valuation, with key concerns being extreme overvaluation, execution risk, and governance issues. The near-term float dynamics may initially boost the stock, but long-term prospects hinge on successful execution of multiple projects and favorable regulatory environments.
Potential upside from Starlink internationalization, Starship cadence improvements, and xAI monetization.
Regulatory headwinds for Starlink and the capital intensity required to maintain orbital exclusivity.