SpaceX IPO Valuation: The Bull and Bear Cases at $135 Per Share

SpaceX’s IPO valuation of $1.75 trillion sets the stage for what would be the largest public debut in stock market history, with the company targeting $135 per share in an offering that Reuters reports is expected to raise $75 billion. The company’s stock gained 19% on its first trading day, according to NBC News, underscoring the demand the offering attracted. Whether that enthusiasm is warranted depends heavily on which version of SpaceX’s future you believe in.

The company arrives at the listing after a period of rapid private-market re-rating. SpaceX merged with Elon Musk’s xAI in February, creating a combined entity Musk valued at $1.25 trillion at the time, according to CNBC. The $1.75 trillion IPO target represents a further step-up from that figure in a matter of months. Existing shareholders, including Musk, are subject to a 366-day lock-up after listing.

What Justifies the SpaceX IPO Valuation

SpaceX’s prospectus lays out what it calls the largest actionable total addressable market (TAM) in human history: $28.5 trillion across three segments. The breakdown, as reported by the Wall Street Journal, is $370 billion for space and launch services, $1.6 trillion for connectivity including Starlink broadband, and $26.5 trillion for AI infrastructure, consumer subscriptions, digital advertising and enterprise applications. The snippet’s earlier reference to a $22.7 trillion AI TAM component does not reconcile with the $28.5 trillion stated total; the WSJ figure of $26.5 trillion does, and is used here.

Against a 2024 revenue base of $18.7 billion, the implied growth runway is enormous. Morgan Stanley and Goldman Sachs analysts, cited by the Wall Street Journal through people familiar with the matter, both project SpaceX revenue will approach $160 billion by 2028, almost ten times its 2025 level.

Dan Coatsworth, head of markets at AJ Bell, framed the appeal directly: ‘There is no other company doing what SpaceX does on the same scale, which could be a key appeal to existing and potential investors. Space excites people because it is the great unknown and SpaceX has a blueprint to turn dreams into dollars. SpaceX boss Elon Musk is a visionary and despite polarised views towards him, the CEO does seem to get things done. The Starlink satellite services arm makes SpaceX interesting because it provides recurring revenue, meaning there is a constant flow of money coming into the business to keep the lights on while it works on big picture ideas like colonising Mars.’

Coatsworth added that bulls might argue SpaceX’s earnings growth potential is so great that valuing the company on 2027 or 2028 forecast earnings could make the equity rating look considerably less stretched.

Where Morningstar Parts Company With the Market

The sceptical case rests on a more prosaic observation: at $135 per share, SpaceX is priced at close to 100 times last year’s revenue. That multiple leaves little room for error if growth disappoints.

Morningstar placed its fair value for SpaceX at $63 per share, less than half the IPO price, in a June 1 research note that put the aggregate equity valuation at $780 billion, some 48% below the IPO target. Michael Field, chief equity strategist at Morningstar, said: ‘Investors are naturally excited about the SpaceX IPO, but with investment bankers suggesting a $1.75 trillion valuation, we believe it’s overvalued. We believe the business has real strengths, particularly in Starlink, but with so many unknown and untested technologies underpinning much of the valuation price, particularly within the AI business, we think the valuation is extremely speculative.’

Morningstar is also more cautious on Starlink’s addressable market. Where SpaceX’s prospectus puts connectivity TAM at $1.6 trillion, Morningstar pegs the realistic opportunity at $129 billion, citing technical constraints and competitive difficulty in dense urban telecoms markets. The firm does maintain one upside scenario: a ‘moonshot’ case values SpaceX at $1.97 trillion, or $154 per share, though it assigns that outcome only a 7% probability.

The prospectus itself is candid about execution risk, noting that many of its ambitious initiatives ‘involve significant technical complexity, unproven technologies or technologies that do not exist, and such initiatives may not achieve commercial viability.’ Coatsworth flagged additional risks including share price dilution from future fundraising rounds and unanticipated setbacks such as launch failures or regulatory shifts.

The Retail Tranche and Index Effect

Two structural features of this offering are worth watching. SpaceX is considering allocating as much as 30% of the deal to individual investors, an unusually large retail tranche that reflects both Musk’s broader following and a deliberate effort to widen the shareholder base. Recent rule changes at major exchanges, including Nasdaq, mean newly listed companies can be added to passive index funds such as the Nasdaq 100 more quickly than under the prior framework, creating a potential wave of forced buying from tracker funds once eligibility thresholds are met.

For long-term investors, the SpaceX IPO valuation ultimately comes down to a binary on the AI segment. Strip out the $26.5 trillion AI TAM and the residual business, however impressive operationally, cannot support a $1.75 trillion price tag. If the AI ambitions are real and deliverable, the 2028 revenue projections start to make the multiple look manageable. If they are not, the gap between Morningstar’s $63 fair value and the IPO price is the territory investors will be navigating. The next meaningful test arrives with the first set of quarterly results as a public company.