Episode summary
Why NYU's 'Valuation Guru' Says Musk's SpaceX Isn't Worth $1.77T
The Journal
· · Hosts: Miriam Gottfried, Telis Demos · Guests: Aswath Damodaran
Summary
SpaceX’s planned IPO is the centerpiece of a broader boom in giant private-company listings, but the company has taken an unusual route by proposing a single $135-a-share price instead of a range. That implies a roughly $1.77 trillion valuation and could still change, while retail investors are being invited to submit conditional indications of interest through major brokerages. The hosts framed the deal as unprecedented in size and structure, with implications not just for new shareholders but also for passive investors if indexes add the stock quickly.
Aswath Damodaran argued that SpaceX is a remarkable company but still too expensive at the proposed price. He separated SpaceX into three businesses — space launch, connectivity, and AI — and said Starlink is the strongest near-term profit engine, while the AI business is the weakest. He put far more skepticism on the company’s $28 trillion total addressable market claim, especially the AI portion, which he called “more a wish than an expectation.”
Damodaran also warned that Elon Musk’s control structure limits outside investors’ ability to change course if governance disappoints. Even so, he said momentum could matter more than valuation in the market, and that bubbles can still produce durable winners. In his view, SpaceX may be a great engineering accomplishment that is simply priced too richly for value investors.
Key takeaways
- The hosts said SpaceX proposed a single $135-a-share IPO price, implying a $1.77 trillion valuation, instead of using a traditional price range.
- Aswath Damodaran valued SpaceX closer to $1.2 trillion pre-prospectus and later around $1.3 trillion, well below the market chatter near $1.8 trillion.
- Damodaran said SpaceX’s 26 trillion AI market estimate is “more a wish than an expectation,” and he sees the AI business as the weakest of the three segments.
- He said Starlink contributes most of SpaceX’s revenue at 11 billion of 18.5 billion and is the business most likely to reach profitability first.
- Damodaran argued that Musk’s control means investors cannot count on a governance reset if management decisions go wrong.
- He said index funds may end up owning SpaceX quickly, which could force passive investors into the stock whether they want it or not.
Notable quotes
“I think it's a it's a great company, an engineering marvel, but you can have a great company, an engineering marvel that's too rich for your taste”
“I think the 26 trillion is more a wish than an expectation”
“you can have a great company that's an engineering marvel that's too rich for your taste”
“It's not your money just let it go you know”
“would you want to live in a world run by actuaries? we'd still be in caves”
How the episode opens
Well, I think even more than Tesla, I look at SpaceX and said, "This is an amazing accomplishment to be able to do something that every expert prior to you coming on the place said you could not do." I think it's a it's a great company, an engineering marvel, but you can have a great company, an engineering marvel that's too rich for your taste.
Hey, Miriam. Hi. Tell us.
Well, today's show is a big conversation about Space X, the giant Elon Muskbacked IPO that is likely to come this upcoming week. It is a huge event for markets and we're going to have a really interesting conversation with a guy who some people call the dean of valuation. That's NYU Stern Finance Professor Oswath Deotarin.
We're going to talk to him about what he thinks SpaceX is worth based on kind of a fundamental analysis of its business. But of course, SpaceX thinks something different about what it is worth, and the market will think something about what SpaceX is worth. And that's kind of where we're going to meet when the IPO price comes out, isn't it?
Yeah. SpaceX surprised everyone and released a price, a single price that it plans to use in its upcoming offering. That could still change. — Single price. That's not typical. Most listeners, SpaceX is expected to complete actually do its IPO. So, right now, we're still in the talking about the negotiating the price phase. And usually a company puts out a range
And then it goes out and talks to investors and kind of feels it out and kind of decides, okay, this is the price we want to use. — They can price in that range, a little bit above, a little bit below.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- spacex ipo
- valuation methodology
- ai business outlook
- founder control governance
- ipo boom and index impact
Companies and tickers mentioned
- SpaceX
- Anthropic
- OpenAI
Watch the episode
Watch “Why NYU's 'Valuation Guru' Says Musk's SpaceX Isn't Worth $1.77T” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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