At the time of writing, Space Exploration Technologies (NASDAQ:SPCX), better known as SpaceX, has seen its stock fall as low as $118. It’s lost close to half the value it quickly reached when it peaked above $225!
I wouldn’t be too surprised if we saw the bears out in force now, with analysts rushing to mark the stock down. But the wild range of broker price targets includes extreme optimism…
Extreme optimism
Brian Gesuale, analyst at Raymond James Financial, kicked us off earlier this month with an $800 price target — approaching seven times the current SpaceX stock valuation. That would mean a market-cap of almost $10trn.
And it could boost a £5,000 investment today into a shade short of £34,000.
Such a target would need everything to go right for SpaceX. It’s based on annual revenue of over $840bn by 2031, with EBITDA reaching $700bn. Hmm, why am I reminded of US investor Cathie Wood’s $2,600 price target for Tesla by 2029?
Is this a good time to mention Tesla’s 15% fall, to $320, after the company reported negative cash flow in its second quarter — and its big AI spending plans spooked investors?
More reasonable average?
Among recent SpaceX targets, the $239 suggested by Bernstein seems like a more plausible 12-month goal to me. And it’s pretty much bang on the overall consensus.
If that comes off, it would still see the stock more than double from its low point. And it could turn £5,000 into £10,127.
But if the average is so far below the top tip, there must be a real low-ball prediction out there, right? Yes, there is. In the days after IPO, Morningstar put a fair value of just $62 per share on SpaceX. That wasn’t actually a broker price target, but consensus estimates are including it as the bottom of the range.
It could slash our potential £5,000 investment to just £2,627.
So what does it mean?
The majority of analysts with recommendations have SpaceX as a Buy. But it’s not easy to uncover firm valuations behind them. Much of the bull case is driven by the success of Starlink, which is generating strong recurring cash flows.
Morgan Stanley, with a $300 target on SpaceX stock, predicts Starlink revenue rising from $11.4bn in 2025, to $121bn in 2030… and to $688bn by 2040.
How much of Starlink’s profits will be ploughed into AI-in-space research remains to be seen. But it’s worth noting that Google owner Alphabet took a tumble on Q2 results too, after also reporting negative cash flow — for the first time in its history — and raising its AI spending plans.
What should we do?
The prospect of investing in SpaceX right now excites me. But it also scares me, as CEO Elon Musk likes to remind us “space is hard“.
For now, I’m sitting back and watching, and hoping for better buying opportunities ahead. Cautious investors might consider doing the same, and perhaps explore other opportunities in the meantime…
Should you invest £5,000 in SpaceX right now?
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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if SpaceX made the list?
Alan Oscroft does not hold any positions in the companies mentioned.
