SpaceX may be the biggest IPO ever, but Morningstar says it is overvalued by half and the smart investors will wait out the hype and buy later

In just over a week, SpaceX is set to debut as one of the biggest IPOs in history with an eye-popping valuation of $1.75 trillion. One top analyst says it may actually be worth half of that, and investors may get a better deal by biding their time. 

Despite the hype surrounding the IPO, partly fueled by the star power of SpaceX’s CEO and controlling shareholder, Elon Musk, Morningstar analyst Nicholas Owens wrote in a note that SpaceX’s actual value is $780 billion—about 55% below its target IPO valuation of $1.75 trillion.

While the company dominates in several areas thanks to its strong launch business and its growing Starlink satellite internet operation, Owens noted that SpaceX faces potential headwinds stemming from its AI business and the uncertainty surrounding some of its longshot projects, such as orbital data centers.

SpaceX is not currently profitable. While its Starlink business, which makes up the majority of its revenue, increased 50% year-over-year, the company still recorded a net loss of $4.95 billion last year partly due to heavy AI-related expenditures. Based on its giant valuation alone, SpaceX would be the seventh-biggest company in the U.S., the Financial Times reported. Yet, by revenue, it would be the 200th biggest. Analysts have warned the company’s valuation is being derived from the future expectations of its ambitious projects like orbital data centers and Musk’s reputation for building innovative companies like Tesla. 

Several factors will inflate the stock price after its scheduled June 12 IPO date, including outsized interest from investment banks who are underwriting it, as well as a small float resulting from the company’s decision to offer only 3% of its shares to public investors, and........

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