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Morningstar Pegs SpaceX at $780B, Half Its IPO Target

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Key insights

  • Morningstar splits SpaceX's $780 billion estimate into $611 billion for launches and Starlink, plus $170 billion probability-weighted for AI operations.
  • Morningstar assigned only a 7% probability to the $1.3 trillion moonshot scenario and a 43% probability to a failure scenario destroying over $81 billion in value.
  • Musk will hold approximately 85% voting control via dual-class shares, with only about 3% of shares offered publicly in the IPO.

Why this matters

SpaceX's IPO carries a roughly $1 trillion gap between Morningstar's $780 billion estimate and the $1.8 trillion target, directly testing whether institutional investors will price governance risk, specifically Musk's 85% voting control and the xAI related-party transaction, into their bids. Morningstar's explicit probability-weighted framework for AI upside, a 7% chance at a $1.3 trillion moonshot versus 43% odds of value-destroying failure, signals that major analysts are beginning to disaggregate AI optionality from core business value rather than fold it into a single headline number. For founders and technical leaders, the scrutiny on the xAI merger's related-party structure will shape how other AI-adjacent companies approaching public markets in 2026 structure related-entity transactions.

Summary

Morningstar analyst Nicolas Owens put a $780 billion fair-value estimate on SpaceX, roughly half the $1.8 trillion the company is targeting for its IPO. Owens splits the figure into $611 billion for launches and Starlink, and $170 billion probability-weighted for AI operations. Starlink's 50% revenue growth to $11.3 billion in 2025 anchors the core case, but Morningstar assigned only a 7% probability to the moonshot scenario of space-based data centers worth $1.3 trillion, and a 43% probability to a failure scenario destroying over $81 billion in value. Essentially: (Morningstar, SpaceX) are roughly $1 trillion apart on valuation, and the IPO prices that disagreement in real time. - Musk is expected to hold 85% voting control via a dual-class structure, limiting minority investor influence. - Morningstar flagged the xAI merger specifically for its related-party nature as a governance concern. - About 3% of shares go public, targeting $50-80 billion in capital raised for R&D, AI infrastructure, and Starlink expansion. Owens stated publicly that investors will have "opportunities to buy the stock at more attractive levels after the IPO" — a direct pre-IPO warning from a major analyst at a company targeting one of the largest listings in history.

Potential risks and opportunities

Risks

  • Retail investors buying at the $1.8 trillion IPO target face potential losses exceeding 50% if the stock rerates toward Morningstar's $780 billion fair-value estimate within 12 months of listing
  • Musk's 85% voting control via dual-class shares, combined with Morningstar's flag on the xAI merger's related-party nature, could attract SEC scrutiny or shareholder litigation during the first post-IPO earnings cycle
  • Morningstar's 43% probability weighting on a failure scenario destroying over $81 billion in value means analysts see meaningful structural downside, a signal institutional risk desks must model before committing capital at the $1.8 trillion target price

Opportunities

  • Investors who accept Morningstar's $780 billion framework gain a public analyst anchor for a short thesis if the stock prices near $1.8 trillion at IPO, with the valuation gap already on record
  • Governance reform advocates and proxy advisory firms gain a high-profile test case for challenging dual-class share structures at the point of a landmark public listing, potentially influencing Nasdaq listing standards
  • Competing satellite operators and launch providers can use Starlink's disclosed $11.3 billion revenue, 50% year-over-year growth, and SpaceX's 83% share of mass sent to orbit as benchmarks when approaching institutional capital in 2026

What we don't know yet

  • Full financial terms of the xAI merger, which Morningstar flagged for its related-party nature but whose specific deal structure was not detailed in public reporting
  • What specific scenarios drive Morningstar's 43% probability estimate for failure destroying over $81 billion in value, which was assigned but not fully explained
  • Whether Morningstar's $170 billion AI operations figure assumes the xAI merger completes on current terms, or reflects SpaceX's standalone AI trajectory independent of the merger

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Originally reported by finance.yahoo.com

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Original headline: Morningstar Values SpaceX at $780B — Less Than Half Its $1.8T IPO Target as Roadshow Begins