SpaceX's two lead underwriters have a $1 trillion chasm in their valuation as quiet period ends

By Steve Goldstein

Morgan Stanley sets $300 price target on SpaceX as Goldman Sachs arrives at $205

What's SpaceX worth? Analysts at underwriters now have their say.

The two lead underwriters on SpaceX's initial public offering, Goldman Sachs and Morgan Stanley, have a valuation gap of more than $1 trillion as they both initiated coverage at the equivalent of buy.

Goldman Sachs analysts led by Eric Sheridan set a price target of $205 on the rocket-launching company, while Morgan Stanley analysts led by Adam Jonas set a $300 target, as the 25-day quiet period expired for SpaceX's underwriters.

SpaceX (SPCX)closed Monday at $160.42, more than 25% below the post-IPO high of $225.64 but still above the IPO valuation of $135. SpaceX stock slipped 2% in premarket trade on Tuesday.

The ironic aspect is that Goldman actually is forecasting better financial performance than Morgan Stanley.

SpaceX won't become free-cash-flow positive until 2031 on Goldman's numbers, but is forecast to double revenue this year with adjusted earnings before interest, tax, depreciation and amortization reaching $352 billion, from last year's $6.58 billion, by the end of the decade.

The Morgan Stanley team have a more conservative approach to the near term - they see SpaceX's adjusted EBITDA to be $162 billion by 2029, and they don't expect SpaceX to become free cash flow positive until 2035.

The difference, then, is how they translate those estimates into a price target. Morgan Stanley discounts cash flow by each division over 15 years "with triangulation/support through multiples," while Goldman's valuation is based on 2029 numbers.

Each team does acknowledge the gap between their numbers and the current reality. "Space is hard," say Jonas and team, as they say the outlook depends on several technologies not yet proven at commercial scale, like fully reusable Starships capable of hitting thousands of launches a year and orbital compute.

Sheridan makes a similar point. "In many ways, SpaceX presents a track record of building toward solutions which many industry experts had previously viewed to be implausible (albeit with this execution not being as linear as public market investors typically desire), particularly with regard to their ability to be the low cost provider of various infrastructure as a service offerings," says the Goldman note.

-Steve Goldstein

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