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

6/7/202639 min

In this week's episode of WSJ’s Take On the Week, co-hosts Miriam Gottfried and Telis Demos break down the unconventional lead-up to the SpaceX IPO. They examine the rocket maker's choice to propose a single price of $135 a share this past week, rather than a range, which set the valuation at around $1.77 trillion. The hosts also discuss the number of shares being offered to retail investors and the broader IPO boom—including Anthropic and OpenAI—that is poised to impact passive index investors. After the break, they are joined by NYU Stern School of Business professor Aswath Damodaran, widely known as the "Dean of Valuation" or the "Valuation Guru." Damodaran dissects SpaceX's estimated more than $28 trillion total addressable market, calling the around $26 trillion portion tied to AI more of a "wish than an expectation." He talks about the risks of investing in a founder-controlled company like SpaceX, where Elon Musk retains the majority of the voting rights due to its share structure. He also explains why momentum for the company’s stock could matter more than valuation. This is WSJ’s Take On the Week where co-hosts Telis Demos, Heard on the Street’s banking and money columnist, and Miriam Gottfried, WSJ’s investing and wealth management reporter, cut through the noise and dive into markets, the economy and finance—the big trades, key players and business news ahead. Have an idea for a future guest or episode? How can we better help you take on the week? We’d love to hear from you. Email the show at takeontheweek@wsj.com. To watch the video version of this episode, visit our WSJ Podcasts YouTube channel or the video page of WSJ.com Further Reading A Guide to Buying SpaceX Shares via Your Brokerage Account  Why It Matters if OpenAI or Anthropic Wins the IPO Race Terms Revealed for SpaceX’s Unconventional $75 Billion IPO Alphabet’s $80 Billion AI Fundraising Push Shows the Value of Being a Public Company S&P 500 Won’t Change Rules for SpaceX  FTSE Russell Latest to Make U.S. Index Inclusion Easier Ahead of SpaceX IPO  SpaceX IPO Could Start a Great Divergence in Index Returns  Morgan Stanley Sees SpaceX’s Revenue Reaching $3.4 Trillion in 2040 For more coverage of the markets and your investments, head to WSJ.com, WSJ’s Heard on The Street Column, and WSJ’s Live Markets blog. Sign up for the WSJ's free Markets A.M. newsletter. Follow Miriam Gottfried here and Telis Demos here.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Clips

TAM ‘Hallucinations’ Call-Out
Engineering Marvel, Pricey Stock
In Defense of Bubbles
Stay Away, Don’t Preach
Musk’s Double-Edged Influence
AI Unit Economics Problem

Transcript preview

First 90 seconds

  1. Shiva Pillai0:00

    Without trusted data, I don't think you have an AI advantage. You may actually be running a high-end liability at machine speed.

  2. Speaker 20:06

    That's Veeam's Shiva Pillai. Join him at the break to learn why trusted data is the fuel that lets AI scale successfully and safely.

  3. Telis Demos· Host0:14

    [upbeat music] Hey, Miriam.

  4. Miriam Gottfried· Host0:19

    Hi, Talis.

  5. Telis Demos· Host0:19

    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 gonna 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 gonna 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 gonna meet when the IPO price comes out, isn't it?

  6. Miriam Gottfried· Host0:57

    Yeah. SpaceX surprised everyone and released a price, a single price that it plans to use in its upcoming offering. That could still change.

  7. Telis Demos· Host1:08

    A single price, that's not typical.

  8. Miriam Gottfried· Host1:09

    That's not typical.

  9. Telis Demos· Host1:09

    Most IPOs- Yeah ... usually put out a range before they do the deal because, listeners, SpaceX is expected to complete, a- actually do its IPO, uh, this coming week. So right now we're still in the talking about the negotiating the price phase.

  10. Miriam Gottfried· Host1:23

    Right.

  11. Telis Demos· Host1:24

    And usually a company puts out a range.

  12. Miriam Gottfried· Host1:25

    And then it goes out and talks to investors- Right ... and kind of feels it out- Right ... and kind of decides, "Okay,

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