think tank New Space Economy<\/a>, Canada-based Hurley told me in an interview that with its bombshell new research note on SpaceX, \u201cMorningstar is separating two very different SpaceX stories that are now being bundled together in the IPO narrative.\u201d <\/p>\n\u201cThe launch business and Starlink business are real, operating, strategically important businesses with demonstrated technical execution, measurable revenue, and significant competitive advantages,\u201d says Hurley, who chronicles lightning-speed changes across the space sector via a digital magazine. <\/p>\n
\u201cThe AI layer is different. xAI, X, and the proposed orbital data center strategy,\u201d he adds, are \u201cmuch more speculative.\u201d <\/p>\n
\u201cThe practical investor question is how much value should be assigned to what SpaceX has already proven, and how much should be assigned to what SpaceX may be able to prove later.\u201d<\/p>\n
SpaceX\u2019s payment of a quarter-trillion dollars for xAI in many ways resembles the exorbitant sums exuberant investors paid out for shooting stars of the dot-com bubble of a generation ago, he says.<\/p>\n
\u201cInvestors in the dot-com boom often paid very high prices for companies with fast-growing narratives, large market claims, and heavy operating losses.\u201d <\/p>\n
The Nasdaq exchange in New York City, onetime showcase for the dot-com boom, is counting down to hosting the biggest IPO of all time for SpaceX shares. (Photo by John Moore\/Getty Images)<\/p>\n
Getty Images<\/p>\n
Hurley says SpaceX\u2019s IPO prospectus sets out, for the first time, the financial performance of its AI arm: SpaceX\u2019s AI segment generated $3.201 billion in revenue in 2025 while losing $6.355 billion from operations. <\/p>\n
In the first quarter of 2026, its AI wing generated $818 million in revenue while losing $2.469 billion from operations. <\/p>\n
\u201cIt is a business whose operating losses substantially exceed its revenue. xAI\/X resembles some dot-com-era companies in the sense that the valuation appears to depend heavily on future dominance rather than current operating performance.\u201d<\/p>\n
\u201cIt does call into question the $250 billion SpaceX paid for xAI.\u201d <\/p>\n
\u201cA $250 billion price against roughly $3.2 billion in annual revenue implies an extremely rich revenue multiple, especially for a business with very large operating losses,\u201d Hurley says. \u201cThat price is hard to justify on financial performance alone.\u201d<\/p>\n
\u201cxAI could have been overvalued in the SpaceX transaction,\u201d he says. \u201cThe related-party nature of the transaction makes independent review and transparent disclosure very important.\u201d<\/p>\n
Yet because Elon Musk holds the overwhelming majority of SpaceX\u2019s super-voting class B shares, and controls more than 80 percent of the outfit\u2019s overall voting power, Hurley says, any new shareholders who buy into the IPO would have little recourse to prevent overpayments for acquisition targets in the future.<\/p>\n
With the predicted upcoming SpaceX takeover of Tesla, he says, \u201cA hypothetical Tesla transaction could also raise related-party conflict concerns if Musk influenced both sides.\u201d <\/p>\n
With its predicted upcoming takeover of Tesla, SpaceX would be further diluting its status as a pure space stock. (Photo Illustration by Daniel Fung\/SOPA Images\/LightRocket via Getty Images)<\/p>\n
LightRocket via Getty Images<\/p>\n
\u201cTesla\u2019s public listing would make the valuation easier to scrutinize because there is a market price, public reporting, analyst coverage, and a public shareholder base.\u201d <\/p>\n
\u201cBut it would not eliminate the risk of overpayment through a large acquisition premium,\u201d he predicts.<\/p>\n
Shareholders who opposed a sky-high payment by SpaceX to acquire Tesla, he says, would be powerless to stop the takeover.<\/p>\n
\u201cMinority shareholders would have very limited ability to block future acquisitions, related-party transactions, or strategic pivots.\u201d <\/p>\n
Their most likely course of action, he says, would be to offload their SpaceX shares before the contested transaction.<\/p>\n
The Morningstar experts previewing SpaceX\u2019s imminent share offering agree.<\/p>\n
They add that the future of SpaceX\u2019s AI division is in many ways unpredictable.<\/p>\n
xAI took over Elon Musk\u2019s social media platform X, once known as Twitter, and \u201chas invested the equivalent of $50 billion to build a large language AI model named Grok and a gigawatt-scale [terrestrial] data center called Colossus.\u201d<\/p>\n
\u201cWe don\u2019t think X is material or particularly relevant to the overall business case,\u201d they say. \u201cWe don\u2019t see Grok as one of the leading AI labs today.\u201d<\/p>\n
\u201cGrok has not demonstrated significant performance advantages over leading peers, and we believe this has prevented its products from gaining meaningful market share.\u201d<\/p>\n
Grok trails far behind the series of increasingly sophisticated ChatGPT models created by the AI superpower OpenAI, and behind Google\u2019s ever-advancing, leading-edge Gemini. <\/p>\n
xAI’s Grok trails far behind the increasingly sophisticated series of ChatGPT models crafted by AI superpower OpenAI and behind Google’s ever-advancing, leading-edge Gemini (Photo by Jonathan Raa\/NurPhoto via Getty Images)<\/p>\n
NurPhoto via Getty Images<\/p>\n
At the same time, Twitter\/X has seen its profits nosedive since its takeover by Musk, and less than one percent of its users are paid subscribers.<\/p>\n
\u201cAdvertisers have been reluctant to remain on the platform,\u201d Morningstar\u2019s Owens and Sharma write, \u201cas X has historically faced criticism for tolerating extreme political views, resulting in high-profile advertiser boycotts that eroded shareholder value.\u201d <\/p>\n
They forecast that SpaceX\u2019s super-constellation of 10,000 Starlink broadband beaming satellites will remain the outfit\u2019s primary generator of profits for the foreseeable future, and point out that more than 2 billion global citizens remain on the other side of the \u201cdigital divide,\u201d cut off from access to the World Wide Web\u2019s online universities, global markets and telemedicine services.<\/p>\n
But most of these outliers live in low-income sectors of the planet, beyond the target demographic groups that Starlink is aimed at. <\/p>\n
SpaceX now operates the world-leading super-constellation of broadband-beaming Starlink satellites (Photo by: Alan Dyer\/VW Pics\/Universal Images Group via Getty Images)<\/p>\n
VW Pics\/Universal Images Group via Getty Images<\/p>\n
They also modeled a spectrum of potential futures based on Elon Musk\u2019s vow to launch one million AI data centers into orbit.<\/p>\n
They say that in their best-case scenario, SpaceX succeeds in overcoming an intricate obstacle course of technological hurdles and manages to capture 4 percent of the global market for these celestial compute centers.<\/p>\n
But in a worst-case prediction they call \u201cNo Go,\u201d SpaceX\u2019s orbiting data centers cannot economically compete with their terrestrial counterparts despite a massive influx of shareholder funding into the scheme.<\/p>\n
\u201cWe assign the No Go scenario a 43% chance of happening,\u201d they say, \u201cworth more than $81 billion of capital destruction on its own.\u201d<\/p>\n
Meanwhile, space economics scholar Brian Hurley predicts that with the sensational whirlwinds of hype surrounding the globe\u2019s biggest IPO, the price of the SpaceX shares is likely to rise, at least for an interim period, with the launch of the stock on the NASDAQ exchange.<\/p>\n
He counsels would-be investors to wait out the volatile early days of trading and instead consider purchasing stock when SpaceX insider shareholders begin selling their equity in the weeks and months following the IPO. <\/p>\n
\u201cThe [SpaceX] share price could decline when employee and private-investor shares become available after the IPO,\u201d he predicts. <\/p>\n
\u201cA small initial float can support a high early price, but later selling windows may create downward pressure as more supply reaches the market.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"While SpaceX is now a world superpower in crafting reusable rockets, its high-priced takeover of the AI start-up…\n","protected":false},"author":2,"featured_media":66868,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[140,160,6421,9323,658,8493,32978,37659,25221,134,2899],"class_list":["post-66867","post","type-post","status-publish","format-standard","has-post-thumbnail","category-xai","tag-elon-musk","tag-science","tag-space-exploration","tag-space-exploration-technologies-corp","tag-spacex","tag-spacex-ipo","tag-spacex-news","tag-spacex-starlink","tag-spacex-stock","tag-technology","tag-xai"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/66867","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/comments?post=66867"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/66867\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media\/66868"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media?parent=66867"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/categories?post=66867"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/tags?post=66867"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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