NYU finance professor Aswath Damodaran pegged SpaceX at $1.3 trillion after reviewing its IPO prospectus, a figure $500 billion below the $1.8 trillion the company is seeking from public markets.
The gap matters for long-horizon investors because it implies SpaceX shares, priced at the company’s target valuation, would need to grow into their price tag – a journey that carries meaningful execution risk across three distinct and unequal business lines.
Key Takeaways
- Damodaran’s fair-value estimate: $1.3 trillion, or ~$100 per share.
- SpaceX’s AI unit faces falling gross margins amid intense competition.
- Damodaran would not short the stock, but is sitting on the sidelines.
Valuation Gap vs. Peers
At $1.8 trillion, SpaceX would rank among the five largest U.S. companies by market capitalisation, despite generating less than $7 billion in adjusted operating earnings last year – a revenue multiple that dwarfs even the loftiest technology IPOs of the past decade 1.
For context, when Meta Platforms went public in 2012 it briefly traded below its offering price before recovering; Uber Technologies shed more than half its market value in its first year as a public company before moving to fair value.
Dissecting Three Businesses With Very Different Margin Profiles
Damodaran breaks SpaceX into three segments – launch and space services, Starlink satellite connectivity, and an emerging AI unit – each carrying a materially different long-run margin outlook 1.
The space business, which carries the best current economics with a 67% gross margin, is projected to improve its long-run operating margin to 45%, up from Damodaran’s earlier estimate of 40%, as reusable-rocket technology drives down per-launch costs.
Starlink’s connectivity segment, currently running at 48% gross margins, is forecast to reach 60% over time. Once the satellite constellation is fully deployed, incremental subscribers cost relatively little to service, meaning scale flows directly to the bottom line.
The AI segment is the critical swing factor for long-term investors. Damodaran cut his forward margin estimate for that unit to 25% from 45%, citing rising infrastructure costs and intensifying competition from well-capitalised rivals 1.
Why the Prospectus Changed – and Did Not Change – the Story
Damodaran’s pre-prospectus estimate was $1.2 trillion; after reviewing the filing, he revised that figure upward by $100 billion to $1.3 trillion.
“If I were to summarise the impact of the prospectus on my SpaceX story, it would be that it has made the story bigger, but also more volatile,”
he said 1.
He also dismissed the company’s own total-addressable-market calculations for the AI business – SpaceX pegs the AI TAM at $26 trillion – arriving instead at a $3 trillion to $4 trillion figure, the same disciplined approach he applied to Uber and Airbnb at their listings.
The Case for Patience Over Conviction
Damodaran said he would revisit SpaceX as a potential buy only if the share price drops substantially below the $100 intrinsic-value level he calculated, echoing the post-IPO corrections that ultimately created entry points in Facebook and Uber 1.
He added a pointed warning to bears: momentum and narrative can sustain expensive valuations far longer than fundamentals-based models suggest, and the same forces that could push SpaceX to fair value could also push it well above it in the near term.
Conclusion
For investors with a long horizon, the SpaceX IPO presents a classic story-versus-numbers tension: a genuinely transformative business selling at a price that leaves little margin of safety at the $1.8 trillion ask, and an AI segment whose margin trajectory is moving in the wrong direction.
Damodaran’s framework suggests waiting for the stock to trade closer to intrinsic value before building a position – a patience premium that has historically rewarded disciplined buyers of high-profile, high-volatility IPOs.
Not investment advice. For informational purposes only.
References
1Steve Goldstein (June 5, 2026). “What SpaceX is really worth, according to the professor called the dean of valuation”. MarketWatch. Retrieved June 5, 2026.
2Aswath Damodaran (June 2026). “SpaceX Valuation – A Post-Prospectus Update”. Musings on Markets. Retrieved June 5, 2026.
3MarketWatch (June 5, 2026). “What SpaceX is really worth, according to the professor called the dean of valuation”. Facebook/MarketWatch. Retrieved June 5, 2026.
4MarketWatch (June 5, 2026). “What SpaceX is really worth, according to the professor called the dean of valuation”. X/@MarketWatch. Retrieved June 5, 2026.
5Omiete Inko-Tariah (May 19, 2026). “Space X is preparing for the biggest IPO in human history”. Facebook. Retrieved June 5, 2026.