Morningstar advises against chasing SpaceX stock at IPO. When is it time to buy?

Investment-rating agency Morningstar has begun analytical coverage of the private space company SpaceX, which is preparing for an IPO, and immediately warned that its value is significantly overvalued. The agency believes that investors will have a chance to buy shares in Elon Musk's company cheaper than at its stock exchange debut.

The agency cautioned long-term investors against buying SpaceX stock in the offering. The fair value of the company is $780 billion - half its current valuation in the over-the-counter market, said Morningstar. In the first weeks after the IPO, however, quotes of the aerospace company may "successfully survive the stage separation phase and even continue to gain altitude," his analysts wrote. This will be facilitated by the low volume of securities in free float (about 3%), their promotion by "almost every investment bank on the planet," investor appetite for bets on AI infrastructure and unprecedented rapid inclusion in the Nasdaq 100 index, the agency pointed out.

The optimal entry point will be formed later, according to Morningstar analysts. "Max Q point" - so called the moment of maximum aerodynamic pressure on the launch vehicle, at which the stabilization of the trajectory is achieved - quotes will reach a few months after the offering, when venture capitalists and SpaceX employees will have the opportunity to sell their shares on the open market. This overhang of the offering will allow long-term investors to build a position with less risk of overpaying than the IPO itself, Morningstar emphasized.

The company's core business - space launches and Starlink satellite internet - gives SpaceX a limited but sustainable competitive advantage due to low costs and economies of scale. The value of this segment is stable and estimated at $611 billion, but in the long term, scaling Starlink involves serious regulatory and technological uncertainty, the agency warned.

The creation of a network of data centers in Earth's orbit carries extremely high risks and should be considered more as an option for commercialization of space computing, the agency says. In the scenario of the emergence of a "minimally viable product" (50% probability) AI-direction will add to the value of SpaceX $114 billion. At the same time, the complete failure of the project (a probability of 43%) will reduce the weighted average valuation of the company at $ 35 billion, calculated in Morningstar.

SpaceX, which now combines rocket, satellite (Starlink) and AI businesses (xAI), expects to raise about $80 billion on the stock exchange in June. If this goal is maintained, the stock offering will be the largest in history. In this case, the impact of the SpaceX IPO on the capital markets can be compared only to the division of John Rockefeller's Standard Oil monopoly in 1911, Bloomberg pointed out.

In April, the company expected to list with a capitalization of more than $2 trillion, but then lowered the benchmark to "at least $1.8 trillion". The SpaceX road show is expected to start on June 4, the placement price is expected to be determined on June 11, and trading will begin on June 12: SpaceX shares will be traded on Nasdaq under the ticker SPCX. Bloomberg sources admit that the stock exchange debut may be delayed for a few days.

This article was AI-translated and verified by a human editor