SpaceX SPCX stock has been priced at $135 per share in an initial public offering. We think the shares are significantly overvalued, given the wide range of likely financial outcomes.
Why it matters: After successive rounds of private investment, culminating in a $250 billion deal to acquire an artificial intelligence lab from its founder that pegged SpaceX’s private market valuation at around $1.5 trillion, conditions are primed for the company’s owners to offer up to 4.9% of shares to public investors.
The bottom line: Our fair value estimate for narrow-moat-rated SpaceX is $63 per share. The firm’s core launch and satellite communications businesses drive its moat rating, due to the prodigious cost advantages achieved through continued research and development and accelerated economies of scale.
- We see a wide range of possibilities around the newly acquired AI business and find its economic moat indeterminate. We believe it also poses a material threat of value destruction to the company, which limits our overall economic moat rating to narrow.
Bulls say: With a small initial float boosted by almost every investment bank on the planet, buoyant investor appetite for AI infrastructure bids, and an unprecedented path to inclusion in the Nasdaq 100 Index just 15 trading days after the IPO, we expect SpaceX’s share price will likely survive separation and even ascend toward orbit, at least for a time.
- Max Q, the moment of greatest atmospheric pressure on a launch vehicle, will come for SpaceX’s stock in the months following the IPO, when successive tranches of stock held by private investors and employees are slated to become available for sale into the public market.
- We think long-term investors eager to participate in SpaceX’s future endeavors and potential success will have opportunities to do so with a greater margin of safety than the initial offering is likely to provide.
