'Valuation guru' Damodaran pegs SpaceX at $1.3T, below company's own estimate

Aswath Damodaran, a New York University professor widely known as the "dean of valuation," has put SpaceX's value at roughly $1.3 trillion — below the figure the company itself has put forward ahead of its planned initial public offering.

Damodaran, a professor of corporate finance at NYU's Stern School of Business, shared the estimate Sunday on a Wall Street Journal podcast.

SpaceX's IPO is scheduled for Friday. In earlier filings with regulators, the company projected its own valuation at $1.77 trillion.

Damodaran said the biggest reason for the gap between his estimate and SpaceX's own figure is the AI segment.

SpaceX divides its business into three segments: commercial rocket launches, the Starlink internet service and AI. The company values xAI — which it acquired earlier this year and which operates the Grok chatbot — as having a total addressable market of $26.5 trillion, roughly 93 percent of the company's overall total addressable market of $28.5 trillion.

"The estimates for the AI segment have gone beyond what is realistic and are heading into excess territory," Damodaran said. He built his own valuation model that assesses each of the three segments separately, estimating the market size and SpaceX's projected market share for each, then applying a target operating margin to arrive at an overall valuation. "The segment where achieving profitability will be hardest is xAI," he said.

Despite his relatively conservative valuation, Damodaran said he does not necessarily expect SpaceX's share price to underperform.

"SpaceX will be one of the most heavily traded stocks in the market. People will buy and sell based on mood and momentum," he said, adding, "Even if your valuation is right, you could still lose a lot of money on the investment."