What the “Dean of Valuation” Thinks Elon Musk’s SpaceX Is Really Worth, So Should You Buy the SpaceX IPO?

Let me tell you about a $500 billion gap.

That’s the difference between what Elon Musk’s SpaceX wants, a $1.77 trillion IPO valuation, and what the man known as Wall Street’s most trusted accountant thinks it’s actually worth: somewhere between $1.25 trillion and $1.35 trillion.

A five-hundred-billion-dollar discrepancy isn’t just a rounding error. It’s the kind of number that makes investors pause mid-click and ask: who’s right?

That’s where Aswath Damodaran comes in. The New York University finance professor, nicknamed the “Dean of Valuation” for his obsessive commitment to discounting cash flows over hype, just published his detailed take on SpaceX. He combed through the prospectus, ran his models, and delivered a verdict.

And in this post, I’m going to walk you through exactly how he got there. Business by business. Number by number.

Because whether you’re thinking of buying the IPO, watching from the sidelines, or just love a good valuation showdown, this one matters. A lot.

Who Is the “Dean of Valuation” and Why Does His Opinion Matter?

Before we get to the numbers, let’s talk about the man behind them.

The Man Who Wrote the Book on Valuation

Aswath Damodaran is a finance professor at NYU’s Stern School of Business. But calling him just a professor is like calling Michael Jordan just a basketball player.

He literally wrote the textbook on valuation. Multiple editions of it. “Investment Valuation: Tools and Techniques for Determining the Value of Any Asset” sits on the shelf of just about every serious Wall Street analyst.

When Damodaran speaks, people listen. Not because he’s flashy, but because he’s careful. Disciplined. Methodical.

Why Wall Street Listens When Damodaran Talks

Here’s the thing: most IPO coverage is just vibes and hype. “Revolutionary company!” “Disruptive!” “The next big thing!” Damodaran does none of that.

He opens the financial statements. He builds discounted cash flow models. He questions every assumption, especially the wildly optimistic ones.

Key point: He’s not anti-SpaceX. He’s anti-bad math.

In fact, in his latest blog post, he admitted he’s “one of Elon Musk’s biggest fans.” But being a fan and being an investor are two different games, and Damodaran knows exactly which one he’s playing.

The Numbers: SpaceX IPO Valuation vs. Damodaran’s Fair Value

Let’s get straight to the heart of it.

What SpaceX wants: $1.77 trillion.

That’s the IPO price tag. The company plans to sell shares at $135 apiece, which would make it the largest IPO in history, eclipsing even Saudi Aramco’s $1.7 trillion record from 2019.

What Damodaran says it’s worth: Between $1.25 trillion and $1.35 trillion.

Or more precisely, after getting access to the prospectus, he landed at roughly $1.22 trillion as his base-case discounted cash flow valuation.

That’s a valuation gap of roughly 30%.

Let me put that in perspective. If Damodaran is right, anyone buying at the IPO price is paying a 30% premium over fair value. That’s not a small margin of safety, that’s a leap of faith.

And it gets even more dramatic when you compare it to other estimates. Morningstar analysts put a DCF valuation on SpaceX at just $780 billion, about 48% below the IPO price target.

So the spectrum looks like this:

• Morningstar: $780B (extremely bearish)
• Damodaran: $1.22–1.35T (cautiously skeptical)
• IPO price: $1.77T (bullish market consensus)
• Musk’s original target: up to $2 trillion (maximum optimism)

Somewhere in that range lies the truth. Damodaran’s job is to find it using math, not magic.

How Damodaran Values SpaceX: A Three-Business Breakdown

This is where things get interesting. Because SpaceX isn’t one business, it’s three.

Damodaran broke them down individually: space launches, Starlink connectivity, and xAI artificial intelligence. And each one tells a different story.

Space (Launches), The Crown Jewel

This is SpaceX’s core. Rockets going up, payloads delivered, contracts signed.

Here’s what Damodaran found: the space division has the best unit economics of all three. Gross margins sit at a healthy 67%, supported by SpaceX’s dominant position, capturing an estimated 70% of a $100 billion addressable market.

But there’s nuance. Competition is creeping in (Blue Origin, Rocket Lab, international players). So Damodaran projects forward margins at 45%, an improvement from his earlier 40% estimate, but a realistic middle ground.

Bottom line: The launch business is the backbone. It’s profitable, defensible, and mature. But it’s not the growth engine anymore.

Starlink, The Cash Machine

Now we’re talking. Starlink carried the company in 2025.

Revenues? $11.4 billion, up 48% year-over-year. Margins? Currently 48%. And Damodaran thinks they’ll climb to 60% over time, because once those satellites are in orbit, the marginal cost of adding customers is almost zero.

That’s the beauty of satellite internet. Build the infrastructure once. Sell it forever.

He projects Starlink capturing 75% of the satellite broadband niche, representing about 10% of the $1.6 trillion global broadband market, leading to $120 billion in annual revenue by 2036.

If that happens? Starlink alone could justify a massive chunk of SpaceX’s valuation.

xAI, The Wild Card

And here’s where things get dicey.

The AI business has the weakest unit economics of all three. Margins are falling, not rising. Competition is fierce, from OpenAI, Anthropic, Google, Meta, and a dozen other well-funded players.

Damodaran originally estimated xAI margins at 45%. After reading the prospectus and seeing the intensity of the competition? He dropped it to 25%.

That’s a huge haircut.

And the costs are staggering. SpaceX spent $12.7 billion on AI in 2025 alone, and the spending is only accelerating.

Here’s what Damodaran said in his CNBC interview: “If you are okay with that, then go with the $1.8 trillion. But if not, then you are in trouble”.

The AI business is the swing factor. It could be worth hundreds of billions. Or it could be a money pit. Nobody knows yet, including the Dean.

Summary: Damodaran’s Margin Projections

Source: Damodaran valuation analysis via MarketWatch

The big takeaway? Starlink is the real engine. The space business is solid. And xAI is a high-risk, high-reward gamble that could make or break the “$1.8 trillion” story.

The $26 Trillion AI Fantasy, Why Damodaran Calls BS on the TAM

This part made me laugh, not because it’s funny, but because it’s so audacious.

SpaceX’s prospectus projects a $28.5 trillion total addressable market (TAM) for its three businesses. Of that, $26 trillion is attributed to artificial intelligence.

Twenty-six trillion dollars.

Let me put that number in perspective. The entire U.S. GDP is about $27 trillion. SpaceX is basically saying: “We’re going after the entire American economy, plus a little extra.”

Damodaran’s response? Respectful disagreement, delivered with the precision of a surgeon.

He called the AI TAM projection “fantasy land.” His own estimate for SpaceX’s total addressable market? About $3 trillion to $4 trillion. That’s a fraction of what the prospectus claims.

And here’s the kicker, Damodaran wrote that he basically ignored the TAM numbers entirely. Just as he did for Uber’s IPO. Because TAM projections are often marketing documents, not financial forecasts.

Key insight for you: When a prospectus leads with “$28.5 trillion opportunity,” take it with a boulder of salt. Real valuations start with cash flows, not fantasies.

IPO History Lesson: When Mighty Stocks Stumble

Damodaran isn’t just a number-cruncher. He’s also a student of market history. And history tells us something important: IPOs are often terrible long-term investments right out of the gate.

He pointed to two famous examples:

• Facebook (2012). The social media giant IPO’d at $38 per share. Within a few months, it was trading below $20, a 50% drop from its offering price.

• Uber (2019). The ride-hailing behemoth lost more than 50% of its market cap in the year following its debut.

Both are world-class businesses today. But if you bought either at the IPO price, you would have spent months, or years, underwater.

Here’s what Damodaran said in his interview: “In the past, companies have moved from over to undervalued.”

Meaning? If you wait, you might get a better price.

But he also made a second point, one that’s crucial: he would never short SpaceX.

Why? Because mood and momentum matter. Stocks can stay overvalued longer than skeptics can stay solvent. And betting against Elon Musk? History suggests that’s a dangerous game.

“More Investor Than Trader”, Why He’s Passing (For Now)

Damodaran describes himself as “more investor than trader.”

What does that mean?

• An investor buys based on valuation. If the price is below fair value, they buy. If it’s above, they wait, or walk away.

• A trader buys based on mood and momentum. They don’t care if it’s “overvalued” as long as someone else will pay more tomorrow.

Damodaran knows which camp he’s in. And he’s honest about his limitations: “I’m awful at both” — meaning gauging mood and momentum.

So what’s his verdict on the SpaceX IPO?

“It is too richly priced for my tastes.”

Simple. Direct. No drama.

But note what he didn’t say. He didn’t say SpaceX is a bad company. He didn’t say Musk will fail. He just said: at $1.77 trillion, the price exceeds my estimate of fair value. So I’ll sit this one out.

If the stock drops enough, “closer to $1 trillion”, he’d reconsider.

That’s the disciplined approach. No FOMO. No hype. Just math.

Other Experts Weigh In, The Valuation Spectrum

Damodaran isn’t alone in his skepticism. The valuation range is all over the map, which tells you just how uncertain SpaceX’s future really is.

• Morningstar analysts placed a DCF valuation of just $780 billion, 48% below the IPO price, citing “narrow moat” and “very uncertain” outlook for the AI segment.

• Jay Ritter, the “Mr. IPO” academic, has expressed caution about the stretched multiples. At the $1.8 trillion target, SpaceX would trade at roughly 94 times its 2025 revenue, compared to the S&P 500’s fraction of that multiple.

• Wealth Professional noted Damodaran would only consider buying “closer to $1 trillion”, a full 45% below the IPO target.

But here’s the counterpoint: the market doesn’t always care what analysts think. The IPO is reportedly oversubscribed. Retail demand is massive. And Musk’s narrative, rockets, satellites, AI, orbital data centers, is compelling to many investors.

So the valuation debate isn’t just about numbers. It’s about narrative versus reality. And right now, the narrative is winning on price.

What This Means for You, Should You Buy the SpaceX IPO?

Let’s get practical. You’re here because you want to know: what should I actually do?

There’s no one-size-fits-all answer. But here’s a framework to help you decide.

If you’re a trader (short-term, momentum-focused)

You don’t care about Damodaran’s fair value. You care about supply, demand, and hype.

The IPO will likely see heavy demand initially. Retail investors are hungry for AI infrastructure plays. The Nasdaq debut will generate headlines. There may be a quick pop.

But: selling pressure could hit in the months after the IPO, when early investors and employees can unload shares at specific windows.

If you trade, trade carefully. Know your exit. Don’t fall in love.

If you’re a long-term value investor (Damodaran’s camp)

You have a choice.

You can buy at $1.77 trillion, accepting the 30% premium and hoping the AI business delivers beyond anyone’s expectations.

Or you can wait.

History suggests IPOs often cool off. Facebook did. Uber did. Even Tesla had brutal drawdowns before becoming what it is today.

Morningstar analysts put it well: “Long-term investors eager to participate in SpaceX’s future endeavors… will have opportunities to do so with more margin of safety than the initial offering is likely to provide”.

Waiting isn’t sexy. But waiting is often profitable.

The middle path

If you’re somewhere in between, excited about SpaceX but nervous about the price, consider this: small initial position, with room to add on weakness.

Buy a token amount at the IPO. Enough to participate. Enough to care. But keep most of your powder dry. If the stock drops 20%, 30%, or 40%, as Facebook and Uber did, you’ll be glad you waited.

Final Verdict: Overpriced Today, But Don’t Bet Against It

Here’s where I land after reading Damodaran’s analysis.

SpaceX is an extraordinary company. The launch business is world-class. Starlink is a genuine cash machine in the making. And if xAI figures out the unit economics? The upside is enormous.

But extraordinary company does not automatically mean extraordinary investment — especially at the proposed price.

Damodaran’s $1.22 trillion base case feels reasonable. Conservative, maybe. But reasonable. The IPO’s $1.77 trillion price tag? That requires everything to go right, in AI, in space, in connectivity, with no major setbacks, no regulatory nightmares, and no competitive disruptions.

That’s a lot of “ifs.”

So here’s my takeaway: great company, overpriced IPO. Watch it. Study it. Maybe buy a tiny piece for the story. But don’t bet the farm.

And whatever you do, do NOT short it.

Because as Damodaran reminded us, mood and momentum matter. And betting against Elon Musk has historically been a fast way to lose money.

The Dean of Valuation is passing on this IPO. But he’s keeping an open mind, and an eye on the price.

You should too.

We’ve covered a lot of ground. From Damodaran’s $500 billion valuation gap to his three-business breakdown. From the $26 trillion AI “fantasy land” TAM to the IPO history lessons from Facebook and Uber.

Here’s the bottom line: Aswath Damodaran, Wall Street’s most respected valuation expert, says SpaceX is “too richly priced” at $1.77 trillion. He’s passing on the IPO, but he’s not shorting it. And he’s keeping an eye on the price, ready to buy if it drops closer to $1 trillion.

The smart money? Watch. Wait. Don’t chase the hype. And remember that extraordinary companies don’t always make extraordinary investments, especially at the peak of a narrative.