SpaceX is live on the Nasdaq index after listing with a 11% premium at $150 to its issue price of $135. From analysts to investors, most people are betting big on the Elon Musk company to sustain its gains in the long run.
However, Morningstar flags some tricky bottlenecks for SpaceX and knocks its valuation down drastically.
The research firm estimates SpaceX's fair value at just $63 per share, nearly 53% below the reported IPO offering price of $135 per share and 58% below its listing price, warning that the current valuation hinges on the success of several unproven technologies.
The bearish view is not based on doubts over SpaceX's capabilities, but on the gap between today's valuation and the uncertain future outcomes required to justify it.
The research assigns around $40 per share to SpaceX's core space and connectivity operations, including launch services and Starlink. It adds $16.50 per share for the potential AI infrastructure opportunity, while accounting for IPO proceeds, cash holdings and debt adjustments to arrive at its final valuation.
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However, for all the things that Space X promises to do in the future such as build AI computing infrastructure in orbit, the analysis has three scenarios, of which the bull case is the least likely to pan out.
The best case scenario, has 7% chances of actually happening and it hypothesises that SpaceX successfully develops orbital AI data centres at scale, deploying tens of thousands of satellites and generating significant AI infrastructure revenue.
On the other hand, the downside scenario has a 43% probability of working and assumes that orbital AI infrastructure fails to deliver economic benefits, forcing SpaceX to abandon the project after significant investment.
Lastly, the most likely and base-case scenario, called the 'Minimum Viable Product' presumes that orbital data centres work but only to a certain extent.
Under this case, SpaceX could capture niche AI workloads where space-based computing offers advantages, but not replace traditional terrestrial data centres. Therefore, leading to the 'fair valuation' at $63 per share.
The firm also believes SpaceX's IPO valuation includes a large “option premium” of $72; meaning that investors are willing to pay more than justifiable to a possibility of future breakthroughs in AI infrastructure, lunar projects and other ambitious ventures.
SpaceX Share Price
As of 12:40 EST, the stock traded 24% higher at $168 per piece, after a bumper 11% premium listing at $150. The issue price was $135.
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