SpaceX lists at $135, experts are arguing wildly about its valuation! Morningstar says "half the price," while Ron Baron sees $30 trillion.

The world's most anticipated IPO debuted today, with Elon Musk's SpaceX listing on Nasdaq at a fixed price of $135 per share, ticker symbol SPCX. This translates to a valuation of approximately $1.77 trillion and a fundraising target of $75 billion, breaking the record for the largest IPO in US stock market history. However, more interesting than the price itself is the heated debate on Wall Street.

This isn't a debate about whether SpaceX is good or bad; most people agree that it's a good company.

bearish camp

The most direct dose of cold water came from Morningstar. Analyst Nicholas Owens valued SpaceX at approximately $780 billion, about 55% lower than its $1.77 trillion IPO price, meaning the stock is overvalued in almost any near- to medium-term scenario. His reasoning is practical: currently only Starlink is truly profitable, and xAI predicts it will burn through about $10 billion by 2026. Nicholas Owens advised investors to avoid buying at the opening bell and wait for the hype to subside and prices to fall before entering the market.

Aswath Damodaran, a New York University professor known as the "godfather of valuation," is also bearish, estimating SpaceX's equity value at between $1.25 trillion and $1.3 trillion, or about $100 per share, far below the IPO price of $135. Damodaran's criticism is sharp, stating that the $26 trillion potential market size for its AI business, as described in the prospectus, "has entered a fantasy world," while its space and connectivity businesses have "reached a reasonably imaginable ceiling." He concludes with the harsh statement that "SpaceX's value is driven by narrative."

However, he doesn't plan to short sell, but he won't buy in immediately. Aswath Damodaran expects SpaceX's IPO to repeat the scenario of Facebook or Uber, with its stock price falling by more than 50% after listing. He chooses to stay in his lane and patiently wait for the bottom to drop.

John Blank, chief equity strategist at Chicago-based independent investment research firm Zacks, went even further, saying that if the stock price falls by 40% to 60% within a few months, it would trigger a series of downward revisions to earnings forecasts, and he viewed the IPO as a potential signal of a market top.

Bullish camp

On the other hand, various parties are touting increasingly ambitious figures. Timothy Horan, an analyst at New York investment bank Oppenheimer, gave it an "outperform" rating with a target price of $190, representing approximately 41% upside from its current price of $135. He is optimistic about SpaceX's vertical integration of rockets, Starlink, chips, and AI, estimating a total potential market size of $10 trillion by 2035.

The real game-changer was legendary investor Ron Baron, whose fund's largest holding is SpaceX, accounting for $15 billion of its $55 billion assets. To date, he has earned a return of approximately 1,312%. Ron Baron predicts that SpaceX will reach $30 trillion by 2040, an increase of over 1,600% from its IPO implied valuation. This value primarily comes from Starlink's global reach and Musk's bet on a space data center that is touted as more efficient than those on the ground.

Cathie Wood's ARK Invest also endorsed the company, with ARK endorsing the $1.75 trillion valuation as "justifiable" and projecting the enterprise value to reach $2.5 trillion or even $3.1 trillion by 2030. The reasons cited include Starlink's over 10 million users, projected revenue of $20 billion this year, and the fact that reusable rockets have reduced launch costs by approximately 95% since 2008.

Dan Ives of Wedbush Securities described the IPO as a "watershed" event for the market and bets that there is an 80% or higher chance that SpaceX and Tesla will merge in 2027.

Even the cautious are choosing to stay on the sidelines. Daniel Newman, CEO of the technology research firm Futurum, bluntly stated that if viewed from a 5-year perspective, $135 may seem expensive one year from now, but it will seem cheap five years from now.

True consensus

While bulls and bears were arguing fiercely, they unexpectedly reached a consensus on one thing: the market would likely open higher, and retail investors were advised against chasing the price. The reason is that SpaceX is issuing all-primary shares, meaning no existing shareholders are cashing out, resulting in a very small number of shares in circulation. Furthermore, retail investors' FOMO (fear of missing out) and index funds' passive buying to secure inclusion in indices like the Nasdaq 100 have created a severe supply-demand imbalance at the opening.

CNBC's "Mad Money" host Jim Cramer took this logic to the extreme, admitting it's difficult to evaluate a stock with a market capitalization of $2 trillion, equivalent to 100 times its sales. He predicted a huge opening surge driven by retail investor enthusiasm, extremely low float, and a passive influx of funds, with the market capitalization potentially doubling and approaching $4 trillion. However, Cramer emphasized that this is likely a speculative bubble, destructive to the overall market, and strongly advised retail investors to avoid chasing the price higher.

Jay Ritter, an IPO expert at the University of Florida, added a governance warning. He described the "Musk effect" as bringing high volatility, and noted that the dual-class share structure allows Musk to firmly hold about 82% of the voting rights, and capital may also flow preferentially to long-term projects such as Mars, rather than directly rewarding shareholders.

The above is not investment advice; please make your decision carefully.

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