"SpaceX Is Too Expensive... I Wouldn't Buy at This Price" — A Valuation Guru's Warning

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[Financial News] As SpaceX prepares for its NASDAQ debut, Wall Street is saying the offering price looks far too rich.
According to CNBC on the 7th local time, Aswath Damodaran, a finance professor at NYU, said SpaceX's valuation at the offering price is excessive and that he would refuse to buy it. Damodaran is widely regarded on Wall Street as a leading authority on corporate valuation.
After closely reviewing SpaceX's prospectus, Damodaran said, "I understand the enthusiasm of short-term traders riding the market's overwhelming momentum, but from the perspective of investors who focus on intrinsic value, the current offering price is too expensive." He valued SpaceX at about $1.3 trillion, or roughly $100 per share. That is more than 25% below the company's target offering price of $135 per share.
He added, however, that the market's move to price the company at around $1.8 trillion is understandable, given that SpaceX was already valued at $1.2 trillion in the private market a few months ago and will receive $75 billion in cash from the listing.
The main reason Damodaran cut SpaceX's valuation was the artificial intelligence business Elon Musk has promoted as a future growth engine.
SpaceX's business now rests on three pillars: space launches, Starlink satellite internet, and artificial intelligence through xAI. Among them, the rocket launch business, with a gross margin of 67%, and Starlink, whose revenue surged 50% last year and has become a reliable cash generator, were seen as having standout competitive strength.
By contrast, the AI division is seen as carrying too much risk relative to its growth potential. SpaceX had optimistically pegged the addressable market for space data centers and AI at $26 trillion, but Damodaran slashed that estimate to between $3 trillion and $4 trillion. He said the reason is that fierce competition among big tech firms and rising service costs have actually worsened margins in the AI segment this year.
As a result, Damodaran lowered the expected operating margin for the AI business from 45% to 25% and warned that the segment could become SpaceX's key Achilles' heel.
In his view, buying at the current offering price is less an investment in the company's fundamentals than a "risky gamble" on Elon Musk and the AI boom.
He pointed to past listings by major tech companies as evidence. Facebook, now Meta Platforms, fell to half its offering price just months after going public, while ride-hailing platform Uber lost more than half of its market value in its first year before eventually entering a range that investors could consider attractive.
He also urged investors to accept the owner-risk factor and the resulting stock volatility that often come with Musk's companies. Damodaran said, "Companies led by Musk see good news and bad news collide at lightning speed, creating enormous volatility," and added, "If you do not like that kind of profile, you should not invest."
SpaceX, ticker SPCX, is scheduled to make its official debut on the Nasdaq Stock Market on June 12. Damodaran said he will stay on the sidelines for now and will consider buying only after the stock goes through market repricing and falls below fair value.
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sms@fnnews.com Seong Min-seo Reporter