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Damodaran: SpaceX Valuation Too Rich, AI a Risk
7 Jun
Summary
- SpaceX's IPO price targets $1.77 trillion valuation.
- Professor Damodaran values SpaceX between $1.25-$1.35 trillion.
- AI business presents the biggest risk due to weak economics.
New York University finance professor Aswath Damodaran has expressed reservations about the valuation of SpaceX as the company prepares for its public market debut. While SpaceX is targeting a valuation of $1.77 trillion, Damodaran's analysis suggests a more conservative range of $1.25 trillion to $1.35 trillion, deeming the company 'too richly priced.'
Damodaran's assessment, detailed on his blog, highlights SpaceX's three core businesses: space launches, the Starlink satellite internet service, and artificial intelligence (xAI). He identifies the AI division as the most significant 'wild card,' offering potential for high rewards but also posing substantial risks due to its weak unit economics and intense competition.
Despite these concerns, Damodaran acknowledges the market's dynamic nature and Elon Musk's track record of delivery. He noted that even highly valued companies like Facebook and Uber have experienced significant stock price fluctuations post-IPO. SpaceX is scheduled to debut on the Nasdaq on June 12.
The AI business, in particular, showed deteriorating gross margins in 2025, impacted by competition from other large language models and increasing operational costs. This contrasts with Starlink, which carried the company's profitability in the same year, indicating a heavy reliance on its connectivity service.
