In-Depth Look at Morgan Stanley’s Projected $100 Billion SpaceX Valuation

Morgan Stanley

Multinational investment banking firm Morgan Stanley doubled its long-term valuation for SpaceX to slightly more than $100 billion. 

Head of Morgan Stanley’s auto and space research Adam Jonas remarked to CNBC that SpaceX “continues to solidify its place as mission control for the emerging space economy.” Jonas continued by saying that “important milestones with Starlink, Starship and government contract dovetail to support an increase in our base valuation”.

Morgan Stanley’s Three-Pronged Approach

Morgan Stanley adopts three cases to evaluate SpaceX’s potential market cap: A base case, a bull case and a bear case. 

Base Case

A base case scenario is the average scenario where a company neither over exceeds expectations nor underperforms. A bull scenario is the ideal projected condition of a company in which prices are rising or are expected to rise. A bearish scenario is characterized by falling prices and a negative outlook for companies.

All three cases take into consideration variables such as product prices, customer metrics, operating costs, inflation, interest rates…

Morgan Stanley has raised its “base case enterprise value” from $52 billion to $101 billion. Within that base case, SpaceX’s rocket segment becomes a business worth $11.7 billion. And Starlink’s satellite internet service is valued at $80.9 billion. Morgan Stanley also devises a scenario where SpaceX adds a point-to-point space travel business worth $8.7 billion.

Bull Case

The firm also increased its bull case for SpaceX. In a scenario where the company will exceed expectations, the firm has upped SpaceX’s valuation from $175 billion to $203 billion. The rocket division and the Starlink service become businesses valued at $52.5 and $132.8 billion respectively.

Bear Case

The bear case valuation also increased from a mere $200 million to $5.4 billion. For this valuation, Morgan Stanley outlined a scenario where the Starlink Project will provide no added value to SpaceX. Additionally, the firm is assuming a scenario where rocket launches are the sole part of SpaceX’s business.

What is the Plausible Outlook for SpaceX?

The aerospace company has carried out a total of eighteen missions so far during 2020. It is currently launching rockets at a rate of approximately one every two and a half weeks. 

There is also a very strong investor demand for SpaceX. Last August, the company secured $1.9 billion in its series-N funding. SpaceX became in the process the third most valuable private company in the world

It is setting new standards for space access on two key fronts: rocket reusability and vertical integration.  

Its satellite internet constellation is also ever-increasing. SpaceX will soon launch its fifteenth Starlink mission overall, and is set to roll out its public beta service in the upcoming weeks. 

Morgan Stanley’s $100 billion valuation will most likely increase over time, and the bullish figures may soon turn into base case ones.

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