Morningstar analysts have valued Space X at $780bn (£579.9bn), a figure less than half of what the company is reportedly aiming for in its upcoming initial public offering.

The valuation comes roughly 48 per cent below its private market valuation, with Elon Musk’s company looking for a valuation between $1.7 trillion and $2 trillion.

The assessment from the research firm comes as the company gears up for a planned roadshow scheduled this week and prepares to go public later this month.

Morningstar analysts pinned their decision to slash its valuation on uncertainty surrounding the prospects of its artificial intelligence business, which includes xAI and social media platform X.

They cited unclear economic models and fierce competition from rivals Open AI and Anthropic in their decision, arguing its AI business “poses a material threat of value destruction to the company”.

Morningstar equity analyst Nicolas Owens and equity director Suryansh Sharma wrote in a research note: “At present, Grok has not demonstrated significant performance advantages over leading peers, and we believe this has prevented its products from gaining meaningful market share.”

The pair also cautioned that the success of Space X’s AI business depends on unproven technologies, including orbital data centres, arguing that in one scenario they could not work despite the company “having invested tens of billions”.

Starlink fears

Analysts also highlighted potential problems with Starlink, the group’s satellite broadband division, arguing it faces “technological uncertainties” which fall out of Space X’s control, including telecom approval challenges.

Owens said: “Potential future revenue streams, such as orbital data centres, face even greater technological uncertainty, as the underlying infrastructure and economics of these concepts have yet to be proven, let alone approach any kind of commercial scale.”

The analysts also argued that while Space X is currently the “undisputed global market leader in launch economics and satellite-based connectivity”, they could soon face greater competition from players such as Blue Origin if the startups continue to improve.

This ultimately led Morningstar to argue that the “company is significantly overvalued”, despite the group having the backing of a number of large investment bankers, and anticipates the share price to ascend in the immediate aftermath before plateauing.

Owens said: “In the months following the IPO, when successive tranches of stock held by private investors and employees are slated for sale into the public market, selling pressure may weigh on the shares. 

“As a result, we think long-term investors eager to participate in SpaceX’s future endeavors and potential success will have opportunities to do so with more margin of safety than the initial offering is likely to provide.”

Brits look to access IPO

Morningstar’s analysis also follows news that British investors will be able to buy into Space X’s potential IPO.

The company is anticipated to file in the Nasdaq under the ticker SPCX, but typically under US listing rules IPOs are off-limits to international retail investors.

Space X is looking to combat this through a UK retail offer, which would give Brits access to the listing if it goes ahead.

Marex Financial will act as the public offer platform operator, meaning it will perform as a ‘middleman’, allowing UK investment platforms and brokers access to the IPO, with individual investors able to buy shares through these platforms.

Platforms which are allowing investors to participate include AJ Bell, Hargreaves Lansdown, Interactive Investor and Etoro.