Aswath Damodaran, the ‘Dean of Valuation,’ believes SpaceX is “too richly priced” for its upcoming public debut, valuing the company between $1.25 trillion and $1.35 trillion, significantly below its target of $1.77 trillion. He flags SpaceX’s AI business, xAI, as a major “wild card” due to weak unit economics, intense competition, and high capital expenditures. Damodaran warns that investing in SpaceX at its current price is a “loaded bet” on AI and Elon Musk’s leadership, which comes with inherent distractions and volatility.
New York University finance professor Aswath Damodaran, widely known as the 'Dean of Valuation,' has expressed significant reservations regarding SpaceX's impending public market debut, stating it is 'too richly priced for my tastes.' While acknowledging the excitement surrounding Elon Musk's venture, Damodaran's detailed analysis, shared on his blog and in an interview with CNBC, suggests a more conservative valuation for the space exploration company.
SpaceX is reportedly aiming for a $135 price per share, which would translate to a staggering $1.77 trillion valuation. However, Damodaran's assessment places the company's true value in a range between $1.25 trillion and $1.35 trillion. Despite the current market enthusiasm, the professor, known for his rigorous valuation approach, prefers to base investment decisions on intrinsic value rather than market momentum, identifying himself more as an investor than a trader.
In a recent CNBC interview on Thursday, Damodaran noted that while a $1.8 trillion IPO pricing might seem justified given its $1.2 trillion private valuation just months ago, prospective investors must critically examine the fundamentals of its diverse business segments.
SpaceX's Business Portfolio and the AI Wild Card
SpaceX operates primarily through three core businesses: space (rockets and launch services), connectivity (Starlink), and artificial intelligence (xAI). Damodaran highlights that while the space launch and Starlink connectivity segments possess strong unit economics and competitive advantages, the AI business, xAI, stands out as the most significant 'wild card.'
Although xAI offers substantial upside potential, it simultaneously presents the weakest unit economics, faces intense competition in the AI landscape, and demands the highest capital expenditures among SpaceX's divisions. "If you are okay with that, then go with the $1.8 trillion. But if not, then you are in trouble," he cautioned during the "Closing Bell" interview.
His blog elaborated on these figures, illustrating that Starlink was a primary growth driver for the company in 2025. Conversely, the AI business demonstrated the lowest gross margins of the three units, with these margins reportedly deteriorating in 2025 due to fierce competition from other large language models and escalating costs associated with delivering AI products and services.
A Loaded Bet on AI and Elon Musk
Damodaran characterizes an investment in SpaceX at its current target price as a "loaded bet" on both the future of artificial intelligence and the leadership of Elon Musk, despite the company being a "unique, cutting-edge business." He does not, however, rule out buying SpaceX stock in the future, as market perceptions and valuations can change over time.
He recalled instances where once-overvalued companies like Facebook (which saw its stock halve months after its IPO) and Uber (which lost over 50% of its market cap within a year of its debut) later became more reasonably priced. Damodaran also acknowledged Musk's history of delivering on ambitious projects but warned that investing in a Musk-run company comes with inherent "huge distractions" and a rapid-fire mix of "good stuff and bad stuff coming at you at hyper speed." He concluded, "If you invest in SpaceX, it's not fair complaining about that. It comes as a package."
SpaceX is reportedly planning to make its public market debut on the Nasdaq on June 12.
