SpaceX, Elon Musk's space exploration and artificial intelligence company, is gearing up for a highly anticipated Initial Public Offering (IPO) later in June, targeting a valuation of $1.8 trillion (£1.34 trillion). However, Morningstar analysts have cautioned that the company is likely to be "overvalued in almost any scenario," estimating its present valuation at $780 billion (£580 billion)—significantly lower than the target.
Overvaluation Concerns
The concerns about overvaluation stem from SpaceX's reliance on future earnings from ventures that are not yet commercially viable. These include data centres in space, cargo transport to Mars, and the commercial value of X's AI chatbot, Grok. Morningstar highlighted that the company's ambitious plans may not justify the lofty valuation sought.
Governance Risks
Morningstar also pointed to governance risks due to the concentration of decision-making authority in Elon Musk. Musk is expected to retain a majority holding and significant control over the company's direction post-IPO. This concentration of power could pose risks for minority shareholders.
SpaceX reported revenues of $4.7 billion (£3.5 billion) for the first three months of the year but also a net loss of $4.3 billion (£3.2 billion). The outcome of its IPO could potentially influence the future listing of OpenAI, another high-profile tech firm.
In full, Musk's SpaceX empire could be overvalued by $1 trillion, according to the analysts' assessment.
