SpaceX (NASDAQ:SPCX) went public less than a month ago, but the level of polarization is already incredible.
For example, one Wall Street analyst just set a price target of $800 for the company’s stock, while another well-known investor recently said he predicted a spectacular crash.
Who’s right?
Shoot to $800?
Shortly after SpaceX went public, we saw a handful of broker price targets come in. But now it’s becoming a deluge, with most putting their estimates at between $200 and $300.
The average is currently $247, which means the company’s stock could be up about 65% by this time next year. But one analyst just ruined that by setting an $800 price target for SpaceX.
This is certainly the highest result on Wall Street. If this were to happen, it would result in a staggering return of 435%, pushing the rocket maker’s market capitalization above 10 trillion dollars.
The company’s Brian Gesuale is an extremely sanguine analyst Raymond James. In a note to customers, he called SpaceX “one of the leading industrial infrastructure companies of the 21st century“.
He identified Starship as the centerpiece of his work. Once launched, this colossal rocket would reduce the cost of launching objects into space by 99%. It would become an unparalleled space infrastructure transportation network.
By 2031, Gesuale will achieve revenue of about $837 billion, up from $38.5 billion this year. EBITDA (earnings before interest, taxes, depreciation and amortization) will boost to almost $700 billion.
Most of them will be powered by artificial intelligence, with orbital data centers potentially operational by the mid-2030s.
Will SpaceX crash?
In turn, investor Jeremy Grantham calls SpaceX “the craziest public offering in human history“.Speaking in the last episode Long view podcast, he said that at some point he would bet on a major crash.
His bearish arguments include:
- SpaceX has “tertiaryAI offer.
- Lack of regulatory oversight of the development of artificial intelligence.
- The vision of space travel iscompletely unimaginable” by most sedate physicists.
- A $2 trillion valuation is extreme for a company.”rolling in red ink“.
Who’s right?
I agree that SpaceX is massively overrated right now. We’re looking at a future price-to-sales ratio of around 51, with no net profit projections due to several years of massive AI investment.
Moreover, there are significant engineering hurdles that could prevent Starship from operating reliably anytime soon (not to mention the challenges of long-distance space travel itself).
To be fair, analyst Raymond James admits that major setbacks at launch can rapidly derail progress. In his opinion, in this scenario, the share price could fall to $125 (below the IPO price of $135).
For me, the reality is probably somewhere in between. I don’t realistically see $800 on the horizon. However, I agree that the commercial opportunities for SpaceX are enormous if Starship works (Starlink Mobile support, orbital AI clusters, and more).
I mean, how the hell can you compete with such a huge reusable space transportation system? Companies and even entire nations like China are already scrambling to keep up with SpaceX – ahead of Starship!
Finally, it’s worth remembering that most engineers/scientists dismissed reusable rockets as impossible or pointless before SpaceX made them work. So I certainly wouldn’t write off Elon Musk’s plans.
But the stock is just too high-priced for me. For now, I will look for other options.
Is it worth investing £5,000 in Space Exploration Technologies Corp. now? – class A?
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Ben McPoland has no position in any of the companies mentioned.
