- SpaceX's first earnings report has been described as 'as bad as we feared', leading to a nearly 20% decline in stock since a prior recommendation.
- Morgan Stanley's Adam Jonas has reaffirmed his overweight rating and outlined a bull case for SpaceX stock to reach $600, valuing the company at $8 trillion.
- Morningstar has assigned a 7% probability to its 'Moonshot' scenario, which estimates a share price of $154.
- Morningstar has been bearish on SpaceX since its IPO, rating it a strong sell due to unsustainable valuation and persistent losses.
- Adam Jonas initiated coverage on July 7 with an overweight rating and a price target of $300.
- SpaceX's profitability challenges are highlighted by a 70x P/S ratio and $12.5B in H1 revenue, with negative operating income and over $28B in capex.
- Starlink's subscriber growth is being offset by declining ARPU and increasing competition, while the AI and launch divisions remain deeply unprofitable.
- Jonas noted that a $100 share price would imply no value assigned to SpaceX's AI business, indicating that most of the value he sees lies in this sector.
SpaceX's stock has dropped nearly 20% since its first earnings report, which revealed significant financial challenges. Analysts have rated the company a strong sell due to its unsustainable valuation and persistent losses. The stock trades at a staggering 70x P/S ratio despite generating $12.5 billion in revenue for the first half of the year, while incurring over $28 billion in capital expenditures.46
Morgan Stanley's Adam Jonas sees a potential $600 bull case for SpaceX, contingent on the successful deployment of AI data centers in orbit and the expansion of Starlink beyond home internet. This scenario assumes that hundreds of millions of AI-powered robots will subscribe to Starlink by 2040, with an average revenue per user of $35.258
However, the company faces mounting competition and declining average revenue per user (ARPU) in its Starlink division. Morningstar analysts have been bearish, valuing the core launch and Starlink businesses at only $40 per share, with the AI/data-center story being crucial for any higher valuation. Jonas noted that a $100 share price would imply no value assigned to SpaceX's AI business, which is currently bleeding cash as it races to build compute capacity amid uncertain demand.3
Overall, while there is optimism about SpaceX's future, the current financial landscape presents significant risks for investors.
“The bearish view cites a 70x price-to-sales ratio, $12.5B in H1 revenue, and over $28B in capex, with an intrinsic valuation of ~$260B versus a $1.75T market cap. Meanwhile, Morningstar assigns just a 7% probability to its $154 'Moonshot' scenario, highlighting the speculative nature of the AI-driven upside.”
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