What’s SpaceX Really Worth? This Analyst Says $63 a Share

**Zaid** (0:00)
Welcome back to The Rundown, interview edition. Today, I am talking to Nicolas Owens, an equity analyst over at Morningstar. Nicolas covers SpaceX, which just had a record-breaking IPO last week, and the stock continues to surge. At the time of this recording, SpaceX stock is trading above $200 a share. But Nicolas believes the actual value of the stock should be closer to $63.
So in this conversation, we get into why Nicolas is so bearish, how he actually got to that number, if space in general is overrated, and also take a look at SpaceX's AI strategy moving forward. This was a really good conversation. I think you guys are going to really enjoy it. So let's get into it. All right, guys, today we are talking to Nicolas Owens, an equity analyst from Morningstar. Nicolas, welcome to The Rundown.

**Nicolas Owens** (0:50)
Thanks for having me, Zaid.

**Zaid** (0:51)
I'm super excited for today's conversation. We're talking SpaceX, your report before the IPO about SpaceX caught my attention. It caught a lot of people's attention because in your report, you said that you were assigning a value of $63 a share to SpaceX. Now, since the IPO on Friday, SpaceX stocks is just, I mean, the stock went up 19% on day one, 20% on Monday. I think it's up another 10% today on Tuesday, the day we're recording this.
Did you expect this to happen after the IPO despite your bearish outlook?

**Nicolas Owens** (1:31)
Would you believe yes?
I think the real tension here is between what Morningstar would call a intrinsic value or fundamentally based valuation of the stock, which I can talk about. And let's say the market for the stock, like supply and demand, what you see in the stock chart, I had every reason to believe that there's a lot of enthusiasm for the stock for Elon Musk companies in general.
And the way the IPO price was set with a relatively small flow, I fully expected to sort of stay high here for a while. And we can even talk really about what the differences are between what I view and let's say what the market seems to be pricing in. But yeah, the market was prying for this stock to go up. That doesn't surprise me. But the real tension is what are investors buying or what are they paying for at these prices and what's reflected in the expectations, if that makes sense.

**Zaid** (2:41)
Well, what I'm surprised though is, I'm with you, I kind of felt the same way to the stock would rally post IPO because a lot of factors here, the small float is one of them. But the fact that it's been kind of like a smooth ride up, it wasn't like a Figma style where you had to jump, I don't know, 50, 60, 70% in the first day, it was like 19% on the first day, 20% on the second day, it's just slowly, slowly going up. And the fact that it wasn't herky-jerky is kind of surprising to me, no big drop on the second day or third day, and it's just kind of like a rocket ship up.

**Nicolas Owens** (3:14)
Oh yeah, a rocket ship, you got it.
Yeah, I mean, I guess we've sort of reached the limits of what I would consider my expertise in terms of looking at volatility-weighted float and volumes and stuff. That's kind of not my area. It may get choppier, it may stay smooth. I think the underwriters are active in the sort of days and weeks after the IPO and kind of managing what they call an orderly market, because they're still moving some of those shares around. So I guess I don't, I think the story for me more long-term will be where will value shake out. In the next year, you'll have potential dilution as lockups expire. You'll also have index funds buying it because it's a big piece of the market now. And so we'll see.

**Zaid** (4:16)
Well, let's talk about the math behind your $63 number that was making the waves. You said this was a mathematics more than skepticism.
Now, we don't need to get into the full DCF model here, but can you kind of break it down? How did you come up with the $63 number?

**Nicolas Owens** (4:34)
Sure. And I think it's really, I really want to emphasize that it's not like disagreeing with the market about the potential for this company to do amazing things. And even let's say unprecedented things, looking at the rocket business and Starlink, the way they develop the Falcon rocket and its reusability is incredible. And they literally change the math on what you even consider to be feasible, the launch into space or the dollars per kilogram, the launches is radically come down because of SpaceX.