SpaceX's $1.77 Trillion IPO Valuation Called Inflated by 'Dean of Valuation'

SpaceX is pushing into its anticipated public offering this week with a target valuation of roughly $1.77 trillion — a figure that could climb further once shares begin trading. But Aswath Damodaran, the NYU Stern professor widely regarded as the foremost authority on company valuation, puts the equity value considerably lower, at around $1.3 trillion, a gap of nearly half a trillion dollars.

The core of the disagreement is SpaceX's AI business, which the company acquired when it absorbed Elon Musk's xAI earlier this year — bringing along the Grok chatbot and other assets. In its IPO filings, SpaceX pegged the total addressable market for that AI unit at a staggering $26 trillion, out of a total $28.5 trillion opportunity the company sees across all three of its divisions (space launch, Starlink connectivity, and AI). Damodaran characterized that $26 trillion figure as stretching past the outer edge of plausibility.

Damodaran built his own segment-by-segment valuation model, assigning each of SpaceX's three business units its own estimated market size, probable market share, and target operating margin. His verdict: the xAI unit is the furthest from profitability of the three, making the sky-high AI market assumptions especially hard to justify at current prices.

Despite his bearish valuation, Damodaran isn't predicting SpaceX shares will crater. He acknowledged that momentum and sentiment could easily overwhelm fundamentals, warning that even investors who correctly assess the intrinsic value could get steamrolled by the sheer trading frenzy the stock is likely to generate. It's a reminder that being right about value and being right about price are two very different things.