SpaceX's Projected $1.75 Trillion IPO Overvalues the Company By More Than 50%, According to This Wall Street Analyst
Wall Street analyst Nicolas Owens from Morningstar argues SpaceX’s projected $1.75 trillion valuation is overinflated, estimating its true worth at $780 billion due to concerns over xAI’s financial losses and capital expenditures. Owens suggests investors wait for post-IPO index inclusions and lock-up expirations before considering a purchase, citing Starlink’s strength but warning of xAI’s potential value destruction.
A Wall Street analyst has questioned the $1.75 trillion valuation projected for SpaceX’s upcoming initial public offering (IPO), calling it significantly overvalued. Nicolas Owens of Morningstar argues the company’s true worth is closer to $780 billion, citing concerns over its artificial intelligence unit, xAI, which generated $818 million in revenue but nearly $2.5 billion in losses in the first quarter of 2026. The unit’s capital expenditures reached $12.7 billion in 2025 and $7.7 billion in Q1 2026, raising doubts about its long-term profitability. Owens’ team describes xAI’s economic potential as uncertain, warning of a ‘material threat of value destruction.’ Meanwhile, SpaceX’s core businesses—Starlink satellite internet and launch services—were valued at $611 billion, with xAI contributing an additional $170 billion in probability-weighted scenarios. Despite this, the analyst believes the stock may become more attractive after the IPO, once index inclusions like the S&P 500 and lock-up provisions expire. SpaceX is expected to be added to major market indexes shortly after its trading debut, forcing funds tracking those indexes to purchase shares. This could provide short-term support for the stock, but Owens advises investors to wait before entering the market. The analyst notes that early buyers may face volatility, with better opportunities arising six months post-IPO as earnings data becomes available. The valuation debate centers on xAI’s financial drag, particularly its operating losses of nearly $6.4 billion in 2025 and heavy capital spending. While Elon Musk’s influence and Starlink’s leadership in satellite internet may justify high expectations, Owens argues the current valuation does not reflect realistic growth prospects. The analyst concludes that patience will allow investors to assess SpaceX’s performance more accurately once market dynamics stabilize.
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