NYU’s ‘Dean of Valuation’: Elon Musk’s SpaceX Isn’t Worth $1.77 Trillion

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**Telis Demos** (0:18)
Hey, Miriam. Hi, Telis. Well, today's show is a big conversation about SpaceX, the giant Elon Musk backed IPO that is likely to come this upcoming week. It is a huge event for markets. And we're going to have a really interesting conversation with a guy who some people call the Dean of Valuation. That's NYU Stern Finance Professor Aswath Damodaran. We're going to talk to him about what he thinks SpaceX is worth based on kind of a fundamental analysis of its business. But of course, SpaceX thinks something different about what it is worth. And the market will think something about what SpaceX is worth. And that's kind of where we're going to meet when the IPO price comes out, isn't it?

**Miriam Gottfried** (0:58)
Yeah, SpaceX surprised everyone and released a price, a single price that it plans to use in its upcoming offering. That could still change.

**Telis Demos** (1:08)
Single price, that's not typical. Most IPOs usually put out a range before they do the deal. Because listeners, SpaceX is expected to complete, actually do its IPO this coming week. So right now we're still in the talking about the negotiating the price phase.
Usually a company puts out a range.

**Miriam Gottfried** (1:26)
Then it goes out and talks to investors and feels it out and decides, okay, this is the price we want to use.

**Telis Demos** (1:32)
They could price in that range, a little bit above, a little bit below. But SpaceX, you're saying, just was like, here's the price.

**Miriam Gottfried** (1:36)
Yeah. It's $135 a share, which would be a valuation of 1.77 trillion as of this recording.

**Telis Demos** (1:45)
To be clear, that's not like the official final IPO price yet. That is what they have proposed.

**Miriam Gottfried** (1:52)
It could still change.

**Telis Demos** (1:54)
I would say that they could still change it before the actual debut of the company. They could refile the prospectus or keep negotiating it. But they've chosen this strategy of saying, rather than setting a range, here's the price.

**Miriam Gottfried** (2:08)
That's supposedly going to simplify negotiations with investors. We'll see how that goes.

**Telis Demos** (2:13)
Well, like everything with this IPO, it's a bit unprecedented because this IPO is unprecedented. It's of a record size, of this enormous valuation, like you said, almost $1.8 trillion. So how they did it in the past, how other IPOs have done it, maybe is just not a good playbook for how SpaceX should do it.

**Miriam Gottfried** (2:29)
Yeah. I mean, Elon Musk, the CEO of SpaceX is known to be quite unconventional in his habits and-

**Telis Demos** (2:37)
Not a guy unwilling to take a chance.

**Miriam Gottfried** (2:39)
Another unconventional thing he's doing is offering a lot of shares to retail investors, investors like you and me. Although you and I are not allowed to buy shares of individual stocks, but our listeners might be among the people who are going out and buying shares, or submitting conditional indications of interest to buy shares. Because that's actually what you have to do in this run-up period to the IPO.

**Telis Demos** (3:03)
You have to say what you're willing to pay.

**Miriam Gottfried** (3:04)
You have to say what you're willing to buy. But it's a non-binding agreement because we don't know if this $135 a share is the actual final price. So you can't commit until you know. So you go in and you say, I'm interested in X number of shares. You could do it at Fidelity, Schwab, Robinhood, SoFi, E-Trade. All these brokerages are offering the opportunity for prospective shareholders to go in and enter a conditional indication of interest. And then when the offering officially prices, which is typically the night before the IPO, we don't know if that's going to happen this time because everything's kind of happening in a little bit of a non-traditional way.
You will then have to go and confirm your interest when we know the real final price, and then you could wake up a shareholder.

**Telis Demos** (3:54)
But how much are you really going to get? I know that historically many companies have offered some sliver of their deals to true retail investors, individual investors, people with online brokerage account type retail investors. But they usually just get a tiny piece of the deal, and there's so much interest. So many people say, sure, I'll buy that at this amount. That you maybe end up getting like literally like a handful of shares.