Investors May Not Want to Chase SpaceX IPO on Day 1
Quick Read
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Morningstar values SpaceX 48% below its $1.5 trillion private valuation, and Damodaran calls the $135 IPO price too richly priced for his tastes.
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Marvell (MRVL) jumped 9% on S&P 500 inclusion news, while Bank of America lifted Sandisk (SNDK) to a $2,100 Buy target on AI-driven NAND demand.
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Citigroup raised its year-end S&P 500 target to 8,100 as AI earnings tailwinds lifted SPY 0.75% Monday after last week's 1,100-point Nasdaq drop.
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SpaceX may be one of the most exciting IPOs to hit the market. Looking to sell 555.6 million shares at $135 apiece for a potentially record-breaking public offering, it won’t be cheap. While exciting, some analysts urge extreme caution. In fact, according to Morningstar, the company is worth less than half of its expected valuation.
“We think the company has been significantly overvalued and investors will have opportunities to buy the stock at more attractive levels after the IPO,” Morningstar analysts said, as quoted by CNBC. “Morningstar’s discounted cash flow valuation of SpaceX is $780 billion, which is roughly 48% below its private market valuation of $1.5 trillion.”
In addition, New York University finance professor Aswath Damodaran just told CNBC, the IPO “is too richly priced for my tastes.” He added, “Although SpaceX is a ‘unique, cutting-edge business,’ an investment in the company at this price is a loaded bet on AI and Elon Musk.
Ian Cooper is a veteran market analyst and investment strategist with more than 20 years of experience covering stocks, commodities, and macro trends. Since 1999, he has helped investors identify market opportunities using a blend of technical analysis, fundamental research, and market sentiment.
He is the creator of the ADD News Flow Strategy, which focuses on trading market reactions to major news events and investor psychology. Cooper was also among the analysts who warned about the 2008 financial crisis and major financial institution collapses ahead of the broader market.
Before joining 247 Wall St., Cooper wrote extensively for InvestorPlace and other financial publications, covering market trends, trading strategies, and investment opportunities.
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