By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
The panel consensus is bearish on SpaceX's $1.75 trillion IPO valuation, citing high execution risks, ongoing losses, and capital-intensive nature of the business.
Risk: High capital expenditure and ongoing losses, particularly in the AI unit, and the need for enormous capital to scale.
Opportunity: Potential for affordable satellite replacement cycles if Starship execution reaches its launch cost targets.
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 →
Barring any last-minute surprises, SpaceX will go public this Friday, setting a new Wall Street record for amount raised. The rocket/AI company is seeking to add at least $75 billion to its coffers and has set a valuation of $1.75 trillion.
Both of those numbers could wobble a bit in the days leading up to the IPO. Despite Elon Musk’s declaration that the IPO price would be $135 per share, the company can adjust that as late as Thursday afternoon, depending on investor interest and feedback from the company’s road show.
- Robert Kiyosaki says this 1 asset will surge 400% in a year and begs investors not to miss this ‘explosion’
- Prime US real estate was a rich person's game — then something changed. Now everyday Americans are getting a piece of the action for as little as $100
- Millionaires under 43 are reshaping investing — just 25% of their portfolios are in stocks. Here’s where their money is going
As investors wait for the first trade, a growing number of financial experts are saying SpaceX is aiming too high with its IPO. And the latest is a professor who is best known as the “dean of valuation.”
Aswath Damodaran, a professor at NYU’s Stern School of Business, says he believes SpaceX’s equity value is roughly $1.3 trillion (1), nearly a half trillion less than the company claims.
Speaking on The Wall Street Journal’s Take On the Week podcast (2), Damodaran raised issues with the “total addressable market” that SpaceX discussed in its S-1 filing. The company claims the AI division could see revenue opportunities of $26 trillion. Damodaran says that’s “reaching the end of what’s plausible and pushing beyond,” especially given the unit’s current heavy losses.
He’s hardly the only person pumping the brakes on the well-hyped IPO.
Damodaran’s comments come just days after Morningstar warned potential investors that the valuation SpaceX was touting was at too high an orbit. Morningstar analyst Nicolas Owens says his fair value estimate of the company’s worth is roughly $780 billion, less than half of what the company is targeting.
“We think the company has been significantly overvalued and investors will have opportunities to buy the stock at more attractive levels after the IPO,” he wrote.
Ed Elson, an analyst who also co-hosts the Prof G Markets podcast with entrepreneur Scott Galloway, has also taken a very skeptical look at the company’s S-1 filing.
“The stock is set to be priced at 107 times sales, which would make it one of the most expensive stocks in history,” he wrote. “It will be twice as valuable [as] Walmart while generating less revenue than Macy’s.”
Four leading AI models discuss this article
"The $1.75 trillion valuation relies on speculative AI revenue projections that fail to account for the extreme capital intensity and regulatory headwinds of the aerospace sector."
Pricing SpaceX at $1.75 trillion—a 107x sales multiple—is a triumph of narrative over arithmetic. While Damodaran’s $1.3 trillion estimate is grounded in traditional discounted cash flow analysis, even that feels generous given the capital-intensive nature of Starship and the regulatory risks inherent in the launch sector. The $26 trillion AI TAM cited by the firm is pure fantasy, serving as a valuation bridge for retail investors who lack the patience for long-term orbital infrastructure cycles. Investors are essentially buying a call option on Musk’s ability to monopolize LEO (Low Earth Orbit) and Mars logistics, ignoring the brutal reality that space is a high-burn, low-margin utility business at scale.
The valuation might be justified if Starship achieves full rapid reusability, effectively collapsing the cost-per-kilogram to orbit and creating a monopoly on the global satellite internet and orbital logistics markets that makes current revenue look like a rounding error.
"The article conflates two separate valuation questions—what is the proven satellite/launch business worth today?—with one speculative question about AI, making it impossible to assess whether $1.75T is egregious or merely optimistic."
The valuation critique hinges on two separate problems conflated as one. Damodaran's $1.3T estimate and Morningstar's $780B hinge almost entirely on AI revenue assumptions—they're discounting a $26T TAM as implausible. But SpaceX's core satellite/launch business (Starlink + commercial) is generating real cash flow today. The article never quantifies what that business alone is worth on standalone metrics. Elson's 107x sales comparison is arithmetically correct but misleading: high-margin SaaS trades at 10-20x sales; SpaceX's Starlink gross margins are ~70%. The real question isn't 'is $1.75T crazy?' but 'what's the satellite/launch business worth, and what discount should AI upside carry?'
If Starlink's addressable market saturates faster than projected and AI remains unprofitable for 5+ years, even conservative valuations of the core business might not justify $1.75T—and the IPO could crater post-listing when reality diverges from hype.
"107x sales pricing embeds unrealistic AI TAM and overlooks heavy current losses that Damodaran and Morningstar correctly flag as unsustainable."
SpaceX's $1.75T IPO target at 107x sales clashes with Damodaran's $1.3T and Morningstar's $780B estimates, driven by an implausible $26T AI TAM and ongoing losses. The filing's revenue claims ignore execution risks in Starlink scaling and reusable launch cadence, while comparing unfavorably to Walmart's scale at half the valuation. Investors face dilution from the $75B raise and post-IPO lockup pressure. Historical tech IPOs show multiples compress quickly when growth misses, especially with Musk's dual-role governance adding volatility.
Starlink's near-monopoly in low-latency satellite broadband plus NASA/DoD contracts could compound at rates that justify re-rating closer to 1.75T within five years, much as Tesla exceeded early skeptics.
"Valuation hinges on speculative AI TAM and near-term cash-flow ignition; without credible path to sustained profitability, the IPO risks a sharp re-rating."
Even though SpaceX spots a massive TAM and AI optionality, the article leans on opinion rather than hard cash flow. The core risk omitted is that SpaceX remains highly unprofitable in its AI unit and will require enormous capital expenditure to scale, making a $1.75 trillion valuation look like a momentum-fueled premium rather than a foundation of cash flow. Morningstar’s fair value (roughly $780B) and Damodaran’s $1.3T point to a wide valuation gap that markets may correct once the road show enthusiasm fades. An IPO at that price would be fragile if investor appetite wavers on execution, regulatory risk, or the sustainability of growth into a higher-rate regime.
Against my stance: a rare, 'category-defining' listing can command a premium despite weak current profits. If growth options like Starlink, defense tie-ins, and a steady launch cadence stay credible, the market may sustain the premium longer than skeptics expect.
"Starlink's high margins are illusory because they fail to account for the massive, continuous CAPEX required to replace short-lived satellite assets."
Claude, your focus on Starlink's 70% gross margin is a dangerous abstraction. You are ignoring the massive, ongoing R&D and CAPEX required to maintain that constellation—satellites have a 5-year lifespan, necessitating constant, expensive replacement cycles. This isn't SaaS; it's a hardware-heavy utility with high churn risk. If SpaceX doesn't maintain an aggressive, low-cost launch cadence, those margins evaporate under the weight of depreciation and maintenance. You’re valuing a tech company, but the business model is closer to a capital-draining telecom.
"Starlink's margin sustainability hinges entirely on Starship cost-per-kg targets, not current gross margins—and no panelist has stress-tested that dependency."
Gemini's telecom analogy is sharp but incomplete. Yes, satellite replacement is brutal capex. But Starlink's unit economics differ critically: launch cost per kg is collapsing (Starship's stated goal: $10/kg vs. current $1,500/kg). If achieved, replacement cycles become affordable even at scale. The real question isn't whether margins survive—it's whether Starship execution reaches those targets. Nobody's modeled sensitivity to launch-cost assumptions. That's the hinge pin.
"Starship cost targets are too speculative to support margin assumptions without quantified probability of success."
Claude overlooks that Starship's $10/kg target remains speculative, with NASA timelines already slipping. Partial achievement sustains Gemini's capex burden on satellite replacements, eroding the 70% margins. This execution dependency, unquantified in sensitivity models, heightens post-IPO dilution pressure beyond the initial $75B raise when cash burn persists.
"Starlink’s apparent margin strength is untrustworthy without cash-flow-focused modeling that includes satellite lifespans and capex; the 1.75T price rests on margin optics, not real profitability."
Claude, Starlink’s 70% gross margin claim ignores the ongoing capex and depreciation from satellite replacement every ~5 years. Even if launch costs drop to $10/kg, replacement cycles keep cash burn high; gross margin can look healthy while free cash flow remains negative. A proper model must show FCF sensitivity to satellite lifespan, launch cadence, and ground segment costs; otherwise the 1.75T signal is pure margin fantasy.
The panel consensus is bearish on SpaceX's $1.75 trillion IPO valuation, citing high execution risks, ongoing losses, and capital-intensive nature of the business.
Potential for affordable satellite replacement cycles if Starship execution reaches its launch cost targets.
High capital expenditure and ongoing losses, particularly in the AI unit, and the need for enormous capital to scale.