"SpaceX, I Won't Buy"...Why the 'Valuation Guru' Refused

"IPO Price Excessive from an Intrinsic Value Perspective"
AI Business with Major Margin Compression Risks Identified as Achilles' Heel

As the highly anticipated initial public offering (IPO) of SpaceX, the space company founded by Elon Musk, CEO of Tesla, draws near, controversy has arisen over SpaceX's IPO price. Some voices argue that the valuation is excessively high compared to the company's true worth.

According to CNBC, a U.S. financial media outlet, on the 7th (local time), Aswath Damodaran, Professor of Finance at New York University, stated that he would refuse to buy SpaceX shares at the IPO price. Professor Damodaran, regarded as a valuation expert on Wall Street, pointed out that SpaceX’s market capitalization, based on its IPO price, is excessively large.

After thoroughly analyzing SpaceX’s investment prospectus, he commented, "I understand the sentiment of short-term traders jumping on overwhelming market momentum," but criticized, "From the perspective of an investor focused on intrinsic value, the current IPO price is simply too high."

A scene of a SpaceX rocket launching. Photo by Reuters Yonhap News.

He went on to evaluate that "the fair equity value of SpaceX is $1.3 trillion, or about $100 per share." This is more than 25% lower than SpaceX's target IPO price of $135 per share.

However, Professor Damodaran added that SpaceX had already been recognized for its $1.2 trillion valuation as a private company, and considering that this IPO will bring in $75 billion in cash, it is only natural that the company is aiming for a market capitalization of around $1.8 trillion.

Meanwhile, Professor Damodaran cited artificial intelligence (AI)—one of SpaceX’s next growth drivers—as a weak link. Currently, SpaceX is engaged in space development using reusable launch vehicles and operates the Starlink satellite internet business. The rocket launch business boasts a margin rate of 67%, and Starlink, with its steep revenue growth, is considered a potential cash cow.

However, there are concerns that the risks in the AI industry are too great relative to its growth potential. Since the market is witnessing fierce competition among big tech companies investing in data centers, profit margins have declined sharply.

Professor Damodaran significantly lowered SpaceX’s expected operating margin for its AI business from 45% to 25%, identifying it as the company's "core Achilles’ heel."

Meanwhile, SpaceX plans to officially list on the NASDAQ market in the United States on June 12. Professor Damodaran stated that he would remain on the sidelines rather than buy, saying he would wait until after the listing to consider purchasing shares, once the stock price undergoes a correction.

This content was produced with the assistance of AI translation services.