SpaceX may be hugely overvalued, say analysts – Daily Business

Elon Musk is heading the biggest IPO in history

Scottish institutions holding big stakes in Elon Musk’s rocket company SpaceX have been warned that it could be worth far less than its $1.8 trillion valuation.

The conglomerate is targeting the biggest stock market flotation in history but analysts at independent research group Morningstar have valued SpaceX at $780 billion.

Such a sobering assessment will puncture some of the hype surrounding the much-anticipated IPO.

Two prominent investors are Edinburgh-based Scottish Mortgage Investment Trust and Edinburgh Worldwide Investment Trust, both managed by Baillie Gifford.

EWIT’s lucrative holding was a factor in US hedge funds Saba Capital Management’s pursuit of the trust in which in now has effective control.

The roadshow for the SpacX share sale is expected to begin on Thursday. 

Private investors in the UK will be able to buy shares through a retail offer handled by Winterflood, the City of London market maker, which said it would run a system that would coordinate orders made through platforms including Hargreaves Lansdown, AJ Bell, Revolut and Aberdeen Group’s Interactive Investor. 

It is expected that the shares will begin trading on 12 June, with SpaceX aiming to raise about $75 billion.

Aside from its rocket business and the Starlink satellite communications network, the company is heavily into AI and datacentres.

However, it is partly because some of its ambitions are unproven that Morningstar’s analysts have downgraded its valuation of SpaceX.

“We think the company has been significantly overvalued and investors will have opportunities to buy the stock at more attractive levels after the IPO,” they say in a note.

It is reported that 23 banks are working on the listing, including Goldman Sachs and Morgan Stanley. According to Bloomberg even a squeezed fee of 0.75%, will still result in a payout of about $500 million for the those involved.

In its prospectus, SpaceX reported revenue of $4.7 billion but a net loss of $4.3 billion for the first three months of the year.

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