SpaceX: price versus value

On June 12, SpaceX will debut on the Nasdaq in the largest IPO in history.

The company

Three businesses under one roof

SpaceX is not one bet but three, of very different natures. Only one of them makes money today, and it is not the one that supports the USD 135 price.

Financial data

What the financial statements reveal

That description of the three businesses is backed by the official document SpaceX filed with the U.S. securities regulator before listing, the first complete and audited picture of its finances. The following table puts numbers to each story: how much each business bills, how much it earns or loses, and the quality of that result.

The table confirms the hierarchy: Starlink funds, space promises, AI consumes capital.

Starlink contributes 61% of revenue, almost all of the year’s growth and the only operating profit. The loss in space is accounting, not economic: with the best gross margin (67%) and treating research spending as investment, it operates with a positive margin of 57%. AI, by contrast, is not rescued even with that adjustment: it is the only segment where margins are shrinking, and it still loses 25 cents for every dollar it bills. Adding up the three businesses and including USD 1,945 M in interest, we arrive at the USD 4,937 M net loss at the top of this report; with research capitalized, operating income would be a positive USD 4,020 M. Whoever buys into the IPO is buying that second reading.

SpaceX invested USD 22,679 M in 2025 in infrastructure and research, double the 2024 figure, and AI absorbed USD 14,223 M of that total: more capital than the other two businesses combined, in a segment that contributes barely 17% of revenue. That is where the central risk of the offering lies, not in the rockets.

Added to this is the strength of the balance sheet, which supports the bet: the company closed 2025 with USD 24,747 M in cash against USD 22,896 M in debt, to which the USD 75,000 M from the IPO will be added. That structure, with almost no net debt, not only rules out a solvency problem but also defines the cost of capital analyzed below.

Valuation

Price versus value

USD 135 is the price at which each SpaceX share will be offered in the IPO. The company is divided into roughly 13,300 million shares; multiplied by USD 135, the market would be paying close to USD 1.77 trillion for the entire company.

The valuation exercise consists of estimating the projected future cash flows of each business and then discounting them at a rate that adequately reflects the risk of those flows. Aswath Damodaran, a renowned academic, values the company at USD 1.30 trillion, which, spread across the same shares, equals USD 97.83 per share, while Morningstar values it at USD 0.78 trillion, or USD 63 per share.

Such large differences reflect the high uncertainty about the company’s future cash flows. For example, SpaceX estimates the total addressable market (TAM) for the artificial intelligence industry in 2036 at USD 28.7 trillion. Respected financial analysts describe this figure as a fantasy and instead estimate the TAM at USD 3 to 4 trillion.

At USD 135 per share, investors would be paying close to 100 times 2025 annual sales, an unprecedented multiple for a company of this size. For reference, the famous Magnificent Seven currently trade at 7.89 times sales, and some analysts are already talking about a bubble.

The following table shows the estimated and commonly cited valuations from Goldman Sachs, Aswath Damodaran (NYU) and Morningstar:

For additional reference, ARK Invest projects a value of between USD 2.5 and 3.1 trillion by 2030, still above Goldman. Valuing very long-term projects in new markets, with new products and technologies still in development, is a difficult task. Damodaran undervalued Tesla for years.

The required growth

How much would SpaceX have to grow to justify a price of USD 135 today?

A simple arithmetic exercise shows how demanding the valuation is. Anyone who buys today at USD 135 aiming to earn 15% a year for 10 years needs to sell the share at around USD 546 in 2036. If by then the market paid a multiple of 13 times sales, which is Tesla’s current multiple, sales would have to grow 40% a year for ten years.

Looking at historical performance, we found no company of this size that grew 40% a year for 10 consecutive years. Salesforce grew at a CAGR of 29.1% over 10 years (2011–2021), Amazon achieved 26.37% and Microsoft 25.10%, and both are considered phenomena of exceptional growth.

There is a second factor, less visible and almost never discussed, that weighs as much as the accuracy of the future cash flow estimate. To estimate what a company is worth today, the profits it will generate in the future are projected and discounted at a rate adjusted for the risk of those cash flows. In other words, the greater the perceived risk in future cash flows, the higher the discount rate should be and the lower the company’s present value.

In Damodaran’s valuation, the value of USD 98 per share assumes that the appropriate discount rate is 8.37% in the first decade and 8.25% for the following years. This would be SpaceX’s appropriate weighted average cost of capital (WACC) for 2025.

Both figures sit around the U.S. market median and start from a beta of 1.00, which would reflect the risk level of a mature North American company with predictable and stable cash flows. That beta is not arbitrary: it is built by value-weighting the risk of the three businesses (aerospace β ≈ 0.90, internet β ≈ 1.10 and AI β ≈ 1.40). The point for investors is this: using a mature-company rate means assuming SpaceX has already reached that stability, when half of its value depends on an AI business that is still losing money.

The following table recalculates the value per share with a beta of 1.8 (hypersensitivity to market movements), the beta calculated for Tesla, which reflects its volatility. We keep Damodaran’s projected cash flows unchanged. The results are as follows:

The conclusions of the exercise show that, on the growth side, the price demands rates no company has sustained; on the risk side, the results define the margin of safety. Under the most favorable assumption, Damodaran’s, which already incorporates generous growth projections, the estimated value is USD 98 per share, 28% below the IPO price. Requiring a level of risk comparable to Tesla’s, that value falls to USD 66 or USD 43, between half and a third of the USD 135.

In all three scenarios the IPO price sits above the estimated value, and the gap widens as the market perceives greater risk.

In terms of fundamental valuation, the data do not support the idea that the USD 135 price offers a discount to intrinsic value; on the contrary, it assumes SpaceX will be treated as a mature company from its first day of trading, a condition its current financial statements do not yet reflect.

Balance

Weighing the arguments and the risks

Every investment decision requires weighing the case for against the case against. Recent history offers one last warning. Tesla multiplied 800× after its 2010 IPO, but took 10 years to post its first annual profit and came close to bankruptcy along the way: confidence in execution demanded extraordinary patience.

And large stock market debuts tend to disappoint in their first 12 months. Facebook fell 50% in its first year, Alibaba closed below its IPO price, Uber lost more than 50%, Rivian 85% and Aramco destroyed value; of the five largest debuts in history, only Visa clearly outperformed the market.

In the case of SpaceX, five risks account for most of the uncertainty:

• Governance. Elon Musk holds 85% of the vote with only 42% of the capital, so there are no effective checks and balances for minority shareholders.
• Technical volatility. It will be high, since only about 4% of the shares will trade, so price movements will be sharp and the staggered expiry of lock-up periods will add selling pressure.
• The AI and Starship pairing. It is the main operational weakness, because the segment that supports the valuation operates with a –183% margin and the IPO filing itself identifies Starship as the number-one execution risk.
• Revenue concentration. A third comes from the U.S. Government, and the AI computing business depends on just two customers.
• Indexes. The company will not enter the S&P 500 because it lacks profits under accounting standards, although it would join the Nasdaq-100 within weeks.

The following table details the factors that, in our view, deserve the most attention.

SpaceX loses money today, but the analyst consensus compiled by Bloomberg expects that to change soon: it forecasts a net loss of around USD 4,275 M in 2026 and, by 2027, the first annual profit in the company’s history, close to USD 4,978 M.

That shift from losses to profits is the key to the valuation, because the USD 135 price is not paid for what the company earns today, but for what it is expected to earn in the future.

That is why, in the first months of trading, every concrete step forward, such as Starship milestones or margin improvements, and every price swing will weigh heavily on the stock: the market will be checking, quarter by quarter, whether that promise of future profitability is being fulfilled. Entry into the Nasdaq-100 will force index funds to buy the stock, which usually gives the share price temporary support regardless of fundamentals.

Beyond the first day of trading, the company’s results over the coming periods will make it possible to test this analysis against verifiable facts and reassess the situation with better information. The first quarterly report will show whether the AI division’s margin improves from its current negative level, which would support the more optimistic valuation, or whether it holds and reinforces the more cautious reading. Starship milestones (successful flights and progress toward full reusability) would validate the main execution risk flagged by the company itself.