SpaceX is worth less than half of its $1.75 trillion IPO target, Morningstar says

SpaceX is expected to start trading on the Nasdaq in just over two weeks, but Morningstar analysts have warned that Elon Musk's tech behemoth is "significantly overvalued."

The hotly-anticipated debut is expected to be the largest ever initial public offering, with SpaceX reportedly targeting a $75 billion fundraise and a valuation of $1.75 trillion.

"We think the company has been significantly overvalued and investors will have opportunities to buy the stock at more attractive levels after the IPO," Morningstar analysts wrote in a note published Monday. 

The analysts see a wide range of possibilities for the potential profitability of SpaceX's xAI and find its "economic moat indeterminate." They view the unit as posing a "material threat of value destruction" to the company. 

As such, Morningstar's discounted cash flow valuation of SpaceX is $780 billion, which is roughly 48% below its private market valuation of $1.5 trillion. 

Morningstar said the upcoming IPO does not offer the best entry point for retail investors. However, long-term investors eager to participate in the company's potential future success will have more opportunities later down the line, with "a greater margin of safety" than at the time of flotation, the analysts added. 

"With a small initial float boosted by almost every investment bank on the planet, buoyant investor appetite for AI infrastructure bids, and an unprecedented path to inclusion in the Nasdaq 100 Index just 15 trading days after the IPO, we expect SpaceX's share price will likely survive separation and may even ascend, at least for a time," Morningstar said. 

SpaceX recorded a net loss in the latest quarter of $4.28 billion after losing $4.94 billion in 2025.

Its Starlink arm generated $3.26 billion in revenue in the latest quarter, accounting for 69% of the total. Its space business lost $619 million on an operating basis, while its AI unit lost $2.5 billion — meaning connectivity is the only profitable part of the company. 

Crucially, SpaceX wrote in its S-1 filing that it has "a history of net losses and may not achieve profitability in the future."

Much of its value relies on success in developing various technologies that are "novel and untested", and SpaceX expects to "incur significant capital expenditures over a period of years" before its AI products and services become profitable, according to the document.

Dan Coatsworth, head of markets at AJ Bell, said "little is known" about SpaceX's financials due to its status as a private company, with Elon Musk controlling 85% of the voting rights. Coatsworth flagged the potential for an eye-watering valuation as a potential risk to further upside.

"A $1.75 trillion valuation would put SpaceX on 67 times sales, three times as much as Nvidia's rating based on its past financial year and latest share price," he added. "It implies SpaceX's valuation could be richer than a plate of dauphinoise potatoes."

Meanwhile, chatter about whether Musk could merge SpaceX with Tesla has resurfaced.