New York University professor Aswath Damodaran is a well-known figure in the financial industry, especially when it comes to company valuations. In his pre-prospectus valuation, Aswath Damodaran assessed the value of SpaceX at roughly $1.2 trillion, but now, with the post-prospectus numbers, he has increased the overall equity value to $1.3 trillion, still far below the targeted $1.8 trillion.
Elon Musk’s SpaceX IPO is aiming for a $75 billion fund mobilisation, at a fixed price of $135 per share, targeting a valuation of $1.8 trillion.
Damodaran’s Valuation vs IPO Price
After updating all inputs and factoring in the $75 billion the company plans to raise from the IPO, the enterprise value for SpaceX edges up from $1.21 trillion in its pre-prospectus valuation to $1.22 trillion, with overall equity value increasing to $1.3 trillion — almost all of the increase coming from the IPO cash infusion.
Against this, the IPO is reportedly being priced at $135 per share, implying a market capitalisation of around $1.8 trillion. Damodaran is unambiguous: at that price, SpaceX is overvalued relative to his estimate by roughly $500–550 billion.
Will Damodaran Buy SpaceX Shares?
Well, that depends on whether the SpaceX share price falls within his valuation range for the company. “My valuation of SpaceX was driven by my interest in the company and belief that it is a unique, cutting-edge business, and my decision on whether to buy into the offering is therefore driven by my assessment of its value. At the rumored pricing of $1.8 trillion for the company, it is too richly priced for my tastes, given my valuation of $1.25-$1.35 trillion for the equity in the company,” he says in his blog post.
“That does not mean that I will never buy the stock, since the market does change its mind, and if the price does drop by enough, my decision would change accordingly,” adds Damodaran.
A case in point: Facebook was selling at half its offering price a few months after its IPO, and Uber lost more than 50% of its market cap in the year after its public offering.
What Should Traders Consider?
Buying shares at the right valuation is what long-term investors look at, not traders. Damodaran also shared his strategy for traders, suggesting he would not be surprised if the SpaceX IPO lists at a premium and moves higher in the initial few days of listing.
“I would not be surprised in the least to see the offering priced at $1.8 trillion, and see a jump in the price on the day of or in the weeks after the offering, and if that is your most likely scenario, being able to get into the offering at the offer price or even in the first few hours or days of trading will be a winning strategy,” said Damodaran.
However, the volatility in SpaceX’s share price could move higher in the initial few days of trading. Not only traders but even investors who might want to ‘short’ the stock if it quickly moves higher will be taking a riskier approach, according to Damodaran.
“The risk, of course, is that momentum can shift quickly, causing a significant price drop, effectively making timing your trades right key to your trading strategy. The shifting and often unpredictable forces of mood and momentum are also the reason that, as an investor, I would not sell short, notwithstanding my value assessment, even if the pricing for the company pushes from $1.8 trillion to $2 trillion or more,” said Damodaran.
Listing Day Hype: Should You Chase It?
The hype around the SpaceX IPO may continue into the week after it gets listed on Nasdaq under ticker SPCX, on Friday, June 12. “First-day pops on hyped tech IPOs frequently give back a chunk in the following weeks, so for a deal this anticipated, the calmer entry is often a few sessions or even a quarter in, rather than chasing the open,” says Viram Shah, Founder & CEO, Vested Finance.
Subho Moulik, Founder & CEO of Appreciate, echoes a similar caution. He advises investors to focus on the broader long-term opportunity in the space economy rather than solely on the IPO event, suggesting that investors may benefit from waiting for initial market volatility to settle before considering an investment.
The Voting Power Problem
Damodaran highlights a critical concern regarding investor power at SpaceX. Elon Musk’s control over class B shares gives him more than 85% of the voting rights, while public investors are limited to class A shares, which carry only one vote each.
This structure leaves shareholders with minimal recourse, especially if SpaceX excessively invests in AI and faces unfavourable outcomes. Damodaran warns that the primary risk lies in SpaceX overextending in AI — driven by an inflated perception of the market and massive capital expenditure — with no checks on Musk’s decisions.
“Elon Musk retains about 85% voting control through a super-voting share class, so ordinary SPCX shareholders should expect very little say over governance. You’re buying the growth story, not a vote,” says Shah.
Disclaimer: This content is for informational and educational purposes only and does not constitute personalised investment advice. The views and valuation estimates in this article are those of Aswath Damodaran, Professor of Finance at NYU Stern School of Business, and other market experts quoted herein. Readers are advised to consult a registered financial advisor before making any investment decisions. Investment in IPOs and equity markets is subject to market risks.