SpaceX investors will get better margin of safety days or weeks after IPO, says Morningstar's Owens
Speakers
Nicolas Owens
— Industrials Equity Analyst at Morningstar
Summary
Morningstar analyst Nicolas Owens argues SpaceX is overvalued at its IPO price and advises investors to wait for a better entry after the IPO. He assigns a 7% probability to the upside scenario and notes the company's strong competitive position, but stresses the current valuation is not justified.
- SpaceX IPO priced at $135 per share, valuing the company at $1.77 trillion.
- Morningstar estimates fair value at $780 billion, calling the stock significantly overvalued.
- Analyst believes the IPO price reflects a 'priced for perfection' scenario with low probability.
- He advises investors to wait for a better margin of safety days or weeks after the IPO.
- SpaceX's competitive moat in rocket design and satellite production is acknowledged.
- The upside scenario (Starship reusability and space data centers) is seen as only 7% likely.
- Technical factors like a 4% float and index inclusion may initially support the stock.
- Discussion touches on Elon Musk's other ventures and the uniqueness of SpaceX's position.
Trade Ideas
Wait for SpaceX post-IPO margin of safety.
SpaceX's IPO price at $135 per share implies a $1.77 trillion valuation, which Morningstar considers significantly overvalued relative to its fair value estimate of $780 billion. The analyst assigns only a 7% probability to the upside scenario (Starship reusable and orbital data centers) that would justify the higher valuation. He advises investors to wait for a better margin of safety after the IPO, as the stock is likely to decline from initial hype in the days or weeks following the offering.
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Speakers: Nicolas Owens · Tickers: SPACEX