Key Points
Morningstar performed a rigorous analysis that concluded that SpaceX is "significantly overvalued."
Factors that could cause the stock to fall sharply include upcoming dilution and governance issues.
SpaceX's share price is now well above even the most bullish Wall Street analysts' price targets.
Many investors have enjoyed a bona fide rocket ride over the last few days. I'm referring, of course, to the historic IPO for Space Exploration Technologies(NASDAQ: SPCX) (which is better known as SpaceX). Not only did SpaceX set a record for the biggest IPO market cap ever, but its shares have also continued to rise sharply following the IPO.
Cryptocurrency investors use the phrase "to the moon" to describe cryptocurrencies that have or are expected to soar in value. This expression seems especially fitting for SpaceX. However, not everyone thinks the ride will end well. SpaceX investors could be in for a rude awakening, according to one top Wall Street analyst.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
A rigorous analysis
Morningstar(NASDAQ: MORN), led by analyst Nicolas Owens, performed a rigorous analysis of SpaceX's financials and growth prospects. The firm's conclusion: the stock is "significantly overvalued." Morningstar estimated that SpaceX is actually worth $63 per share. That's roughly 70% below the space technology company's share price as of midday trading on June 16, 2026.
Are Owens and his team just "negative Nellies" when it comes to SpaceX? Not really. In a deep dive report earlier this month, they argued, "Our valuation is the result of mathematics more than skepticism." Morningstar constructed probability-weighted discounted cash flow (DCF) models for SpaceX based on three scenarios.
Importantly, Morningstar gave SpaceX "a lot of benefit of the doubt in two of the three scenarios." For example, its analysts assumed that the company would be able to launch multiple times per week with its reusable Starship rocket and would successfully build and commercialize space-based AI data centers.
Owens acknowledged on SpaceX's IPO day that several factors have driven the stock's performance so far. He noted the company's "small initial float boosted by almost every investment bank on the planet, buoyant investor appetite for AI infrastructure bids, and an unprecedented path to inclusion in the Nasdaq-100 Index just 15 trading days after the IPO." Owens added that Morningstar expects the stock could "even ascend toward orbit, at least for a time."
However, he stated that the months ahead could be treacherous once early private investors and employees are allowed to sell their shares. Morningstar's Mark Hulbert also warned, "As the stock market digests SpaceX's mega-IPO, investors would do well to remember that bigger is not necessarily better." Hulbert pointed to studies showing that stocks with the largest market caps have historically underperformed the S&P 500(SNPINDEX: ^GSPC).
Issues that increase the risk
SpaceX's biggest moneymaker to date has been its Starlink satellite internet business. However, Starlink will soon face competition from a deep-pocketed rival, Amazon(NASDAQ: AMZN). According to Amazon CEO Andy Jassy, his company's Leo will offer performance and cost advantages versus Starlink.
Governance concerns also increase SpaceX's risk. Elon Musk controls around 82% of the voting power of the company's common stock. The world's first trillionaire can, for all practical purposes, do whatever he wants with SpaceX -- even if the moves don't benefit other shareholders.
One significant worry is that Musk could push for SpaceX to make large acquisitions, potentially including Tesla(NASDAQ: TSLA). Such mega-deals present two issues for investors. First, SpaceX would likely have to issue large amounts of new shares to fund the acquisitions, diluting the value of existing shares. Second, integrating with other companies could be problematic and ultimately cause SpaceX to stumble.
A rude awakening on the way?
Morningstar's most optimistic scenario for SpaceX pegs its value at $154 per share. Oppenheimer(NYSE: OPY) is one of the most bullish analysts about SpaceX. Its price target is $190 per share. These two rosy valuations are around 28% and 12%, respectively, below SpaceX's share price as of midday on Tuesday.
SpaceX's business is impressive. Its opportunities are exciting. The company's vision is inspiring. But its stock is priced for perfection (and perhaps more than perfection). Investors buying shares at current levels are betting that everything will go right. That rarely happens in the real world. Morningstar could be right that a rude awakening is on the way.
Should you buy stock in Space Exploration Technologies right now?
Before you buy stock in Space Exploration Technologies, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Space Exploration Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $440,440!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,303,950!*
Now, it’s worth noting Stock Advisor’s total average return is 959% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of June 17, 2026.
Keith Speights has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Tesla. The Motley Fool has a disclosure policy.
