SpaceX, Elon Musk’s space exploration and artificial intelligence firm, is set for a highly anticipated IPO later in June, but one agency has warned prospective investors that it could be overvalued to the tune of $1bn dollars.
The company, which owns the space-based Starlink internet service and xAI – which in turns owns social media platform X – is expected to be the biggest stock market flotation in history as it seeks to hit a $1.8tn (£1.34tn) valuation when it goes public.
While the company has already been available to invest in through certain funds, private investors will be able to buy shares in it directly once it lists on the Nasdaq exchange, the same as they already can in other firms – such as Mr Musk’s Tesla.
However, Morningstar analysts are cautioning that SpaceX is highly likely to be “overvalued in almost any scenario, at least in the near term”, given that much of its potential valuation is placed on future possible earnings including in industries which are not yet commercially viable.
They place a present valuation of $780bn (£580bn) on the company instead.
Data centres in space, cargo transport to Mars and the commercial value of Grok, X’s AI chatbot, are all examples of where SpaceX currently has plans to monetise its business in future. But even the company itself has warned that some of these may be speculative to the point of never seeing a real return, depending on the progress of technology among other factors.
Morningstar analysts further added that the “concentration of decision-making authority in a single individual creates governance risks that warrant careful consideration”, noting that Mr Musk will retain not only a majority holding but also power over the company direction due to its share structure.
“We think the company has been significantly overvalued and investors will have opportunities to buy the stock at more attractive levels after the IPO,” they added.
It has sometimes been the case that big companies’ share price falls soon after going public, as some longer-term or even original investors take the chance to sell their holdings and realise a profit.
AI infrastructure company Cerebras Systems went public in mid-May with a listed IPO price of $185 per share, and by the end of the first full day of trading had risen to $311 – a 68 per cent gain.
However, it has since fallen back to $230, around a quarter lower, with plenty of volatility around the price in the intervening days.
Kathleen Brooks, research director at XTB, said “the outcome of SpaceX’s IPO could determine enthusiasm for OpenAI’s listing” later this year, with the ChatGPT owner also keen to take to the stock market.
SpaceX’s prospectus shows revenues for the first three months of the year of $4.7bn (£3.5bn) – but a net loss of $4.3bn (£3.2bn). However, it also claims a total addressable market of $28.5tn (£21.2tn) if its investments and plans for space pay off in style.
