SpaceX says it’s worth $1.75 trillion. The ‘dean of valuation’ says that’s half a trillion too high
SpaceX is set to go public this Friday, targeting a record-breaking valuation of $1.75 trillion. The rocket and AI company aims to raise at least $75 billion in the offering. While Elon Musk has proposed an IPO price of $135 per share, this figure could be adjusted as late as Thursday afternoon based on road show feedback.
Why are financial experts questioning the SpaceX valuation?
Several prominent analysts argue that SpaceX is aiming too high. Aswath Damodaran, a professor at NYU’s Stern School of Business known as the “dean of valuation,” estimates the company’s equity value is roughly $1.3 trillion. This is nearly half a trillion dollars less than the company’s own target.
Damodaran specifically challenged the “total addressable market” described in the company’s S-1 filing. He noted that SpaceX’s claim of $26 trillion in revenue opportunities for its AI division is “reaching the end of what’s plausible and pushing beyond,” particularly as that unit currently faces heavy losses.
Other experts are even more skeptical. Nicolas Owens, an analyst at Morningstar, placed the fair value estimate at roughly $780 billion. Owens stated the company has been “significantly overvalued” and suggested that investors may find more attractive entry points after the initial IPO wave.
Ed Elson, an analyst and co-host of the Prof G Markets podcast, pointed to a pricing of 107 times sales. He argued this would make SpaceX twice as valuable as Walmart while generating less revenue than Macy’s, calling the filing “unserious, empty, hallucinatory, and borderline dishonest.”
What may happen after the first trade?
Despite the red flags, analysts suggest the IPO could still be a massive success driven by sentiment. Damodaran noted that the stock will likely be one of the most heavily traded investments, with activity driven by “mood and momentum.”
This volatility means the stock could potentially “stomp” investors who rely solely on value metrics, even if those metrics are correct. A possible next step for cautious investors, according to Owens, is to wait for the initial excitement to subside before buying.
Frequently Asked Questions
What is the target valuation for the SpaceX IPO?
The company has set a valuation of $1.75 trillion and seeks to raise at least $75 billion.
Who are the main critics of the SpaceX valuation?
Key critics include NYU professor Aswath Damodaran, Morningstar analyst Nicolas Owens, and analyst Ed Elson.
When can the IPO price be finalized?
While Elon Musk declared a price of $135 per share, the company can adjust this as late as Thursday afternoon.
Do you believe market momentum outweighs traditional valuation metrics for companies like SpaceX?