As anticipation builds for the upcoming SpaceX initial public offering (IPO), independent research firm Morningstar has issued a cautious outlook, suggesting the company’s market valuation may be significantly detached from its current fundamental performance. SpaceX is scheduled to debut on the Nasdaq under the ticker SPCX on June 12, with a targeted IPO valuation of $1.75 trillion.
In its first-ever coverage of the aerospace firm, Morningstar assigned a fair value estimate of $780 billion—roughly 55% below the company’s target. Lead equity analyst Nicolas Owens noted that while SpaceX maintains a dominant position in the launch market, the market’s pricing of the company’s artificial intelligence ambitions appears overly generous given the available evidence.
Valuation Disconnect and the AI Component
Morningstar’s valuation model relies on a Discounted Cash Flow (DCF) analysis, which accounts for projected future cash generation. The firm assigned a combined enterprise value of approximately $611 billion to SpaceX’s core launch operations and its Starlink satellite broadband unit, which reported $11.3 billion in revenue in 2025.
The firm attributed only $170 billion to the company’s AI segment, which was bolstered by the February 2026 merger with Elon Musk’s xAI. Morningstar highlighted three primary concerns regarding the AI division’s impact on the valuation:
- Operating Losses: xAI posted an operating loss of $6.36 billion in 2025, contributing to a total net loss of $4.94 billion for the combined entity.
- Feasibility Concerns: Analysts flagged SpaceX’s orbital data center ambitions as carrying high uncertainty regarding scientific and economic viability.
- Competitive Positioning: Morningstar indicated that it does not currently view the Grok chatbot as a leading competitor to major AI labs such as OpenAI or Anthropic.
Market Dynamics and Governance Risks
Beyond the balance sheet, Morningstar and other observers have pointed to governance risks. The company’s dual-class share structure is expected to grant Elon Musk 85% voting control, effectively limiting the influence of retail investors. Furthermore, the xAI merger has drawn scrutiny due to the lack of an arm’s-length negotiation process.
Despite these valuation concerns, market observers suggest that the share price may see short-term support due to technical factors:
- Limited Float: The IPO is expected to offer only about 4% of shares to the public.
- Forced Buying: Nasdaq’s fast-entry rules could allow SPCX to qualify for inclusion in the Nasdaq-100 index after 15 trading days, potentially triggering automatic inflows from passive funds.
The firm’s analysis warns that investors should monitor the company’s staggered lockup expiration schedule, which allows existing shareholders to sell portions of their holdings starting with the release of second-quarter earnings. This gradual increase in supply may lead to more accurate price discovery later in 2026. As Bank of America strategist Michael Hartnett previously cautioned, the high-profile entry of multiple large technology firms into the public markets could increase concentration risks within broader indices.
