Morningstar values SpaceX at $780 billion, half its IPO target

By Niket Nishant

June 2 (Reuters) - Morningstar analysts pegged SpaceX's valuation at $780 billion, less than half of what the Elon Musk-led company is reportedly targeting in its initial public offering, ahead of a planned roadshow this week.

Prospects for the company's artificial intelligence business, which includes xAI and social media platform X, were uncertain given unclear economics and competition from OpenAI and Anthropic, the research firm said.

"We don't see Grok as one of the leading AI labs today," said Morningstar equity analyst Nicolas Owens, referring to the chatbot developed by xAI.

Owens also warned that the future promise of SpaceX's AI segment relies on untested technology such as orbital data centers. Starlink, the satellite broadband business, also faces technological hurdles, many of which may be outside the company's control, he said.

"We think the company has been significantly overvalued and investors will have opportunities to buy the stock at more attractive levels after the IPO," Owens said.

The warning stands out as a rare contrarian view at a time when enthusiasm for the IPO has been high.

SpaceX is aiming to launch the roadshow on June 4, with the stock scheduled to debut on the Nasdaq on June 12, Reuters has reported.

Morningstar said the stock could ascend in the near term, given the low float and the strong cadre of major investment banks underwriting the IPO.

Goldman Sachs, Morgan Stanley, BofA Securities, Citigroup and J.P. Morgan are among the underwriters for SpaceX's share sale.

However, "long-term investors eager to participate in SpaceX's future endeavors and potential success will have opportunities to do so with a greater margin of safety than the initial offering is likely to provide," Owens said.

SpaceX is targeting a valuation of $1.75 trillion in the IPO, Reuters has reported. The company was last valued at $1.53 trillion on secondary trading platform Forge Global.

(Reporting by Niket Nishant in Bengaluru; Editing by Sriraj Kalluvila)