SpaceX is set to debut on the Nasdaq with an anticipated valuation of $1.75 trillion, aiming to raise $75 billion, making it the largest IPO to date. However, Morningstar analysts argue that this valuation is inflated, estimating the company's worth at $780 billion, approximately 48% lower than its private market valuation.
They highlight the uncertainty surrounding SpaceX's profitability, particularly regarding its AI unit, which has incurred substantial losses. The analysts caution that the IPO may not be the best entry point for retail investors, suggesting that better opportunities may arise later.
Despite this, they acknowledge that initial demand could drive the stock price up temporarily due to strong investor interest in AI infrastructure and the potential for inclusion in the Nasdaq 100 Index shortly after the IPO. The company's recent financial performance shows a net loss of $4.28 billion, with its Starlink division being the only profitable segment.
Analysts also note the risks associated with SpaceX's high valuation compared to established companies like Nvidia, raising concerns about the sustainability of such a price point. Additionally, speculation about a possible merger between SpaceX and Tesla has resurfaced, adding another layer of intrigue to the company's future prospects