The hype around SpaceX’s blockbuster IPO has been near-impossible to ignore.
The company set a fixed price of $135 per share, is targeting a record $75 billion raise on the Nasdaq under the ticker SPCX, and is scheduled to debut on June 12, making it the largest initial public offering in history, more than double Saudi Aramco’s 2019 record of $29 billion.
But one of Wall Street’s most respected independent research firms just issued a warning that investors should not overlook.
Morningstar initiated its first-ever coverage of SpaceX this week and arrived at a fair value estimate of $780 billion, roughly 55% below the company’s $1.75 trillion IPO target.
The firm’s lead equity analyst, Nicolas Owens, didn’t soften the message: “We think the company has been significantly overvalued and investors will have opportunities to buy the stock at more attractive levels after the IPO,” CNBC reports.
Morningstar’s math: where the $780 billion comes from
Owens built his valuation using a Discounted Cash Flow (DCF) model, a method that estimates a company’s value based on how much cash it is realistically expected to generate over time.
A DCF model works backward from future projections, discounting them to reflect uncertainty; a higher uncertainty means a lower present value.
He assigned SpaceX’s core launch business and Starlink satellite broadband unit a combined enterprise value of approximately $611 billion.
Starlink deserves much of that credit.
The satellite internet division posted $11.3 billion in revenue in 2025, a 50% year-over-year increase, with operating income exceeding $4.4 billion, TradingKey reports.
Related: Navellier to SpaceX buyers: wait for escape velocity
Morningstar also gave SpaceX credit for its launch dominance.
The company accounted for 83% of all mass sent to orbit from Earth in 2025 and has reduced launch costs per kilogram by more than 95%, Morningstar notes.
Owens then applied probability-weighted scenarios to SpaceX’s AI segment, the one acquired through its all-stock merger with Elon Musk’s xAI company in February 2026.
That deal was the largest corporate merger by valuation in history, creating a combined entity worth $1.25 trillion.
The AI component added only $170 billion to Morningstar’s total, producing a blended fair value of $780 billion.
The implication: Morningstar believes the market is pricing SpaceX’s AI ambitions far too generously, based on the actual evidence available today.
The three key reasons Morningstar sees AI as a drag:
- xAI posted an operating loss of $6.36 billion in 2025, pulling SpaceX’s net loss for the year to $4.94 billion, despite $18.67 billion in combined revenue.
- Owens flagged orbital data centers, one of SpaceX’s headline AI ambitions, as carrying “high uncertainty regarding scientific and economic feasibility.”
- Morningstar concluded that it does not see Grok, xAI’s chatbot, as one of the leading AI labs competing against OpenAI and Anthropic today.
What the valuation gap looks like in practice
At the $1.75 trillion IPO target, SpaceX would be trading at approximately 94 times its 2025 revenue of $18.67 billion, TechTimes reports.
For context, Nvidia, one of the most profitable technology companies in the world, trades at roughly 22 times trailing revenue.
Owens labeled SpaceX shares “overvalued in almost any scenario, at least in the near term.”
He noted that sustaining a $1.75 trillion valuation through 2030 would require annual revenues exceeding $100 billion, with compound annual growth above 40%, according to Goldman Sachs data cited by TradingKey.
Related: Blue Origin’s explosion just made SpaceX even harder to catch
ARK Invest, led by Cathie Wood, holds a far more optimistic view.
Yahoo Finance previously reported that Wood projected SpaceX could reach a $2.5 trillion enterprise value by 2030, calling the IPO target “grounded in a plausible trajectory” for Starlink, Starship, and orbital AI.
That is a direct disagreement between two credible sources, and investors need to decide which framework fits their risk tolerance.
Governance risk compounds the picture
Morningstar’s concerns stretch beyond the balance sheet.
Owens flagged Musk’s expected 85% voting control through a dual-class share structure, meaning retail investors who buy SPCX will have virtually no say in how the company is run.
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The xAI merger was also not conducted at arm’s length.
Musk both negotiated and approved a deal that transferred his own AI company into SpaceX, a governance structure Morningstar flagged as a “material threat of value destruction.”
Danish pension fund AkademikerPension placed SpaceX on its investment blacklist, stating that SpaceX’s governance structure is “catastrophic,” Bloomberg reports.
What happens to the price after the IPO
Here is where Morningstar’s note becomes practically useful for ordinary investors.
The firm acknowledged that SpaceX’s stock is likely to hold steady or even climb in the days immediately following the listing.
But this is for reasons that have nothing to do with the company’s underlying value.
According to Yahoo Finance, SpaceX is offering only about 4% of its shares to the public in this IPO, an unusually small float.
Nasdaq’s fast-entry rules also make SPCX eligible for Nasdaq-100 index inclusion after just 15 trading days, which would force passive funds to buy the stock automatically, regardless of valuation.
Limited supply plus forced demand equals short-term price support.
The real test comes months later.
SpaceX’s lockup structure is notably different from a standard IPO.
Rather than a single 180-day lockup for insiders, the prospectus allows existing shareholders to sell 20% of their holdings as early as the first quarterly earnings report.
Selling rights then step up at 70, 90, 105, 120, and 135 days post-IPO, Fortune reports.
That staggered release means the float will expand steadily through the end of 2026, creating windows where sellers could outpace buyers.
Owens’ guidance: wait for the post-IPO excitement to settle and watch for the stock to drift toward a more defensible valuation as additional supply enters the market.
Before buying SPCX on day one, consider these signals to watch:
- Starship payload delivery timeline: SpaceX’s prospectus targets commercial launches in the second half of 2026; delays would pressure the growth thesis.
- xAI revenue visibility: Until xAI posts operating profit, the $170 billion AI valuation Morningstar assigned rests on probabilities, not performance.
- Lockup expiration dates: The first insider sell window opens with second-quarter earnings, likely in August, and that is where the real price discovery begins.
Investing personality Jim Cramer, who addressed the SpaceX deal on CNBC’s “Mad Money,” said he “cannot fully sign off” on the deal at the current valuation, despite seeing three potential near-term catalysts.
Bank of America strategist Michael Hartnett has also raised concerns, warning that SpaceX, OpenAI, and Anthropic landing in the same quarter could push tech concentration in the S&P 500past the 48% threshold that has historically preceded market bubbles.
Morningstar’s $780 billion fair value is not a prediction that SpaceX will fail.
It is a methodical argument that the gap between the company’s current fundamentals and its IPO price is too wide to ignore.
Long-term investors who buy before the excitement subsides may be paying today for returns that belong to 2030, and only if everything goes right.
That is a bet worth sizing carefully.
Related: Mark Cuban drops bold $500K email bet on SpaceX competitor
