SpaceX, Elon Musk's space exploration and artificial intelligence company, will hold a highly anticipated initial public offering at the end of June, but an agency has warned potential investors that it could be overvalued by a billion dollars.
The company, which owns space internet service Starlink and xAI, which in turn owns social media platform
While the company has already been available to invest through certain funds, private investors will be able to buy shares of it directly once it is listed on the Nasdaq exchange, just as they can already do in other companies, such as Musk's Tesla.
However, Morningstar analysts warn that SpaceX is very likely “overvalued in almost any scenario, at least in the near term,” given that much of its potential valuation is based on potential future profits, even in industries that are not yet commercially viable.
Instead, they put the company's current valuation at $780bn (£580bn).
Data centers in space, transporting cargo to Mars, and the commercial value of Grok, X's AI chatbot, are examples of where SpaceX currently has plans to monetize its business in the future. But even the company itself has warned that some of them may be speculative to the point of never seeing a real return, depending on the advancement of technology among other factors.
Morningstar analysts further added that “the concentration of decision-making authority in a single individual creates governance risks that deserve careful consideration,” noting that Musk will retain not only a majority stake but also power over the company's management due to his ownership structure.
“We believe the company has been significantly overvalued and investors will have opportunities to buy shares at more attractive levels after the IPO,” they added.
It has sometimes been the case that the share price of large companies falls shortly after going public, as some long-term or even original investors take the opportunity to sell their holdings and make a profit.
AI infrastructure company Cerebras Systems went public in mid-May with an initial public offering price of $185 per share, and by the end of the first full day of trading it had risen to $311, a 68 percent gain.
However, it has since fallen back to $230, down around a quarter, with a lot of volatility surrounding the price in the intervening days.
Kathleen Brooks, head of research at XTB, said that “the outcome of SpaceX's IPO could determine enthusiasm for OpenAI's IPO” later this year, and the owner of ChatGPT is also interested in going public.
SpaceX's prospectus shows revenue 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 to have a total addressable market of $28.5bn (£21.2bn) if its investments and space plans pay off in style.
