Morningstar analysts have issued a stark warning ahead of SpaceX's highly anticipated initial public offering (IPO), stating that the company is 'significantly overvalued' at its targeted $1.75 trillion valuation. According to Morningstar, SpaceX's true value is closer to $780 billion, which is approximately 48% below its current private market valuation of $1.5 trillion and less than half of the IPO target [1]. The IPO, expected to take place on the Nasdaq in just over two weeks, is set to be the largest ever, with SpaceX reportedly aiming to raise $75 billion [1].
A key concern highlighted by Morningstar is the potential risk posed by SpaceX's xAI unit, which analysts describe as having an 'indeterminate economic moat' and representing a 'material threat of value destruction' for the company [1]. The report notes that SpaceX's profitability is highly uncertain, especially given the wide range of possible outcomes for xAI [1].
Financially, SpaceX reported a net loss of $4.28 billion in the latest quarter, following a $4.94 billion loss in 2025. Starlink, the company's connectivity arm, generated $3.26 billion in revenue in the latest quarter, accounting for 69% of total revenue and standing as the only profitable segment. In contrast, the space business lost $619 million on an operating basis, and the AI unit posted a $2.5 billion loss [1].
SpaceX's S-1 filing acknowledges a 'history of net losses' and warns that the company 'may not achieve profitability in the future.' The filing also emphasizes that much of SpaceX's value depends on the success of 'novel and untested' technologies, and the company expects to 'incur significant capital expenditures over a period of years' before its AI products and services become profitable [1].
Despite these concerns, Morningstar anticipates that strong investor appetite, a small initial float, and rapid inclusion in the Nasdaq 100 Index could support SpaceX's share price in the short term. However, the analysts caution that the IPO may not be the best entry point for retail investors, suggesting that better opportunities may arise post-IPO as the market adjusts [1]. Dan Coatsworth, head of markets at AJ Bell, noted that 'little is known' about SpaceX's financials due to its private company status [1].
CONCLUSION
Morningstar's analysis casts doubt on SpaceX's lofty IPO valuation, highlighting significant risks from its xAI unit and ongoing losses. While short-term market enthusiasm may buoy the stock, analysts recommend caution, suggesting that more attractive entry points could emerge after the IPO as the company's financial realities become clearer.