Elon Musk’s SpaceX is days away from what may be the biggest IPO ever, but Morningstar is telling investors to sit out the listing and wait for a cheaper entry.

Morningstar Analyst Nicolas Owens has put a $780 billion weighted base case on SpaceX, roughly 56% below the $1.77 trillion valuation implied by the company’s $135 fixed IPO price.

“People will have an opportunity to get a better margin of safety than they’re likely to see on the day of the IPO, or even in the weeks right after,” Owens said.

Why Morningstar Sees Better Entry Points Ahead

Owens told viewers the firm’s $1.9 trillion upside case, which prices SpaceX at $154 per share, hinges on Starship reusability scaling and the commercialization of orbital AI data centers. He assigns that “priced for perfection” outcome a roughly 7% probability.

SpaceX is also debuting with what Owens called a “minuscule” 4% float, fast-tracked index inclusion and a locked-in price, factors that may juice opening demand before supply catches up.

The Lockup Calendar Is The Catalyst

Over 60% of SpaceX’s outstanding stock, including the shares held by Musk, will be under an extended lockup period that runs beyond the typical 180-day window, according to the company’s amended prospectus.

The structure mirrors Snowflake Inc. (NYSE:SNOW), which used a similar staggered release ahead of its 2020 debut and still finished its first year with a drawdown of more than 50%.

Truist’s Keith Lerner found first-year maximum drawdowns averaged 55% across 30 major tech IPOs, with Rivian Automotive Inc. (NASDAQ:RIVN), Robinhood Markets Inc. (NASDAQ:HOOD) and Coinbase Global Inc. (NASDAQ:COIN) among the steepest declines.

Prediction market traders have not yet embraced the bearish case. The Polymarket book on SpaceX’s IPO closing market cap currently shows the $2.0 trillion to $2.5 trillion range leading at around 46% across more than $2.3 million in volume.

A spillover trade may build in Tesla Inc. (NASDAQ:TSLA) around the listing. CNBC’s Jim Cramer has suggested the IPO could trigger a Tesla sell-off, while a J.P. Morgan “sell” rating on the stock reportedly carries a 60% downside call.

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