Summary
SpaceX plans to IPO at a fixed price of $135 per share targeting a $1.77 trillion valuation, but Morningstar values the company at only $780 billion. Meanwhile, Alphabet's record-breaking $85 billion fundraise for Google's AI business and Anthropic's IPO preparations signal strong investor appetite for AI-related offerings.
SpaceX Sets Unconventional Fixed-Price IPO Strategy
SpaceX has taken an unusual approach to its initial public offering by setting a fixed price of $135 per share ahead of its roadshow, according to a filing with the Securities and Exchange Commission. The company plans to sell 555.6 million shares, raising $75 billion, with underwriters holding an option to purchase an additional 83.33 million shares at the IPO price for another $11.2 billion.
At the $135 per share price tag, SpaceX would achieve a valuation of $1.77 trillion, assuming the EchoStar spectrum and Cursor transactions close. This valuation would position Elon Musk's aerospace company as the seventh-largest in the United States, surpassing Tesla's current market capitalization of approximately $1.6 trillion. Goldman Sachs leads the underwriting syndicate, followed by Morgan Stanley, Bank of America, Citigroup, and JPMorgan Chase.
The fixed-price strategy represents a departure from typical IPO processes, where companies offer a price range to gauge investor demand sensitivity at different levels. SpaceX's approach follows a series of testing-the-waters meetings leading up to the roadshow launch, suggesting confidence in market demand. The company is scheduled to begin its roadshow the week of June 8, with pricing set for June 11 and trading debut at Nasdaq under the ticker SPCX on June 12.
Following the offering, Musk will retain over 82% voting control of the company, according to the filing. This concentrated ownership structure means the publicly traded float will be relatively limited, potentially creating supply-demand dynamics that could support the stock price in the near term.
Morningstar Questions Valuation Fundamentals
Just as SpaceX prepared to launch its roadshow, Morningstar, one of Wall Street's most respected independent research firms, issued its first coverage of the company with a sharply contrarian view. Equity analyst Nicolas Owens assigned SpaceX a fair value estimate of $780 billion using discounted cash flow modeling, representing approximately 45% of the IPO target valuation and nearly half of the company's recent $1.53 trillion valuation on secondary market platform Forge Global.
Owens stated unequivocally in the report: "We believe the company is significantly overvalued, and investors will have opportunities to buy at more attractive prices following the IPO."
The valuation breakdown reveals the core of the disagreement. Morningstar assigns approximately $611 billion in enterprise value to SpaceX's core launch operations and Starlink satellite broadband business combined. The firm then adds roughly $170 billion in probability-weighted value for AI operations, including xAI and social media platform X.
Morningstar rates SpaceX with a "narrow moat," citing the cost advantages of reusable rockets and the scale benefits of the Starlink constellation. However, the firm believes recent AI-related acquisitions detract from the overall rating.
AI Business Becomes Valuation Flashpoint
The treatment of SpaceX's AI ambitions represents the most significant divergence between the company's self-assessment and Morningstar's analysis. Owens modeled three scenarios for the AI business: an optimistic "moonshot" scenario valued at $1.3 trillion but assigned only a 7% probability; a base case; and a pessimistic "not viable" scenario that would destroy over $81 billion in value, assigned a 43% probability.
"We do not believe Grok is among today's leading AI labs," Owens wrote, referring to xAI's chatbot product. He further cautioned that SpaceX's AI business prospects depend on unproven technologies such as orbital data centers.
This skepticism stands in stark contrast to the valuations being assigned to AI businesses across the market. The divergence highlights fundamental uncertainty about how to value AI capabilities, particularly when they are attached to companies with established operations in other sectors.
Starlink Provides Solid Foundation
In contrast to the AI uncertainty, Starlink's fundamentals appear more robust. According to S-1 filing disclosures, Starlink revenue grew 50% year-over-year to $11.3 billion in 2025, with operating profit exceeding $4.4 billion. The service has surpassed 10 million users and represents SpaceX's only currently profitable business segment.
Despite these strong metrics, the valuation mathematics remain challenging. At a $1.75 trillion valuation, SpaceX's total 2025 revenue of approximately $18.7 billion implies a price-to-sales ratio approaching 100x, well above typical technology company multiples. For context, even high-growth software companies rarely command price-to-sales ratios above 20x in public markets.
Morningstar acknowledges that despite fundamental concerns, SpaceX shares could still appreciate in the near term. The combination of limited float and rapid inclusion mechanisms for Nasdaq 100 index membership could create technical buying pressure independent of valuation considerations.
Musk Responds With Historical Analogy
Facing valuation skepticism, Musk turned to Tesla's history for his defense. He posted on X platform: "Tesla's market cap at IPO was only 0.1% of its current value." When users questioned how to justify a price-to-sales ratio exceeding 50x, Musk responded simply: "You shall see."
The analogy faces obvious challenges. Tesla currently trades at a market capitalization of approximately $1.3 trillion, with a price-to-sales ratio around 15.7x and price-to-earnings ratio approaching 400x. Even by Tesla's already expensive valuation standards, SpaceX seeks a higher market capitalization with substantially lower revenue, setting a higher bar for justification.
NYU Stern School of Business professors and valuation experts have noted that while precedent matters, each company must ultimately be valued on its own fundamentals. Tesla's success does not automatically validate similar multiples for different businesses, even under the same leadership.
Alphabet Fundraise Signals Robust AI Investor Appetite
While SpaceX's valuation debate unfolds, another major capital markets event provides encouraging signals for AI-related public offerings. Google parent company Alphabet completed a record-breaking equity raise for its AI business operations.
The company initially planned to sell $40 billion worth of various equity instruments, including two different share classes plus smaller "depositary shares" priced for accessibility to a broader investor base. However, oversubscription was so strong that the first tranche raised $45 billion instead, CEO Sundar Pichai announced on X Monday. Notable buyers included Berkshire Hathaway, still known for value investing discipline, which purchased $10 billion worth.
Alphabet plans to sell another $40 billion worth next quarter, bringing total proceeds to $85 billion. Even $80 billion would have topped the previous equity offering record set by Brazilian oil producer Petroleo Brasileiro SA, which raised $70 billion in 2010, according to Bloomberg.
Crucially, investors are buying shares of Alphabet itself, not a younger, potentially debt-laden AI startup. Alphabet operates a very healthy business: $110 billion in revenue with high profit margins in Q1 alone, up 22% year-over-year. The company expects to spend between $180 billion and $190 billion on capital expenditures—largely on AI infrastructure and data centers—before year end.
Implications for AI IPO Pipeline
The timing of Alphabet's fundraising success carries significance beyond the company itself. As Anthropic prepares to go public, this enormously successful stock sale sends a very positive signal for the broader AI IPO pipeline. It demonstrates that public market investors have substantial appetite for AI-related projects, even at scale.
This demand extends beyond mature technology giants to potentially encompass emerging AI-focused enterprises. Market enthusiasm for AI infrastructure, large language models, and related applications creates a favorable window for AI companies planning public listings.
From an institutional investor perspective, these large-scale fundraising and IPO events reflect capital markets' recognition of AI technology's long-term value. For institutions providing digital asset custody services, the expanding intersection between traditional financial markets and emerging technology sectors may present new opportunities for cross-market asset management.
The contrast between SpaceX's valuation controversy and Alphabet's fundraising success illustrates different facets of current market sentiment. Investors appear willing to fund AI development at established, profitable companies with clear deployment strategies. The reception for newer AI ventures seeking public market valuations remains to be tested.
Valuation Divergence Reflects Fundamental Pricing Challenge
The gap between SpaceX's self-assessment and Morningstar's analysis reflects fundamental challenges in pricing high-growth technology companies. On one hand, SpaceX possesses unique technical advantages and market position, with Starlink demonstrating strong growth momentum and profitability. On the other hand, the company's substantial bet on AI operations introduces significant uncertainty.
A price-to-sales ratio approaching 100x requires extremely high growth rates sustained over multiple years, combined with significant margin expansion. This represents a formidable challenge for any company, even one with Musk's leadership track record and innovation history.
Investors must weigh SpaceX's technological leadership and market opportunities against high valuation risks. Morningstar's analysis serves as a reminder that even the most innovative companies should be valued on reasonable financial foundations.
Market Outlook and Institutional Considerations
As SpaceX's roadshow unfolds and the June 12 listing date approaches, markets will soon render their verdict. The company's unconventional fixed-price strategy and concentrated ownership structure create unique dynamics that may support near-term price action regardless of fundamental concerns.
Meanwhile, Alphabet's fundraising success and Anthropic's IPO preparations indicate that investor interest in the AI sector remains far from exhausted. This sustained appetite could inject new vitality into the broader technology IPO market.
For institutional market participants, these developments highlight the continued evolution of public markets to accommodate technology-driven business models. The scale of capital being deployed into AI infrastructure and development suggests a multi-year investment cycle that may reshape competitive dynamics across multiple sectors.
The coming weeks will test whether SpaceX can sustain its ambitious valuation in public markets, while also providing data points on investor appetite for AI-focused offerings. These events will likely influence the timing and pricing strategies of other companies in the IPO pipeline, particularly those with significant AI components in their business models.
The divergence between optimistic company projections and more conservative analyst assessments underscores the importance of rigorous due diligence in evaluating high-growth technology investments. As public markets continue to grapple with how to value AI capabilities and infrastructure, investors will need to balance enthusiasm for transformative technology against fundamental financial discipline.
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