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The SpaceX (NASDAQ:SPCX) share price has only headed in one direction in recent weeks. Since hitting $225 in mid-June, it has slipped all the way down to $112 today.
For those keeping score, that’s a sobering 50% crash!
But past performance is not a reliable guide to the future, as they correctly say. So the question now is, can it get back above $200? Or will it fall below $100?
Here’s what the experts think…
The latest projections
The first thing to note about Wall Street price targets is that they often fall wide of the mark. I tend to see them as weather forecasts: useful and worth checking out, but liable to change quickly as new information arrives.
In this sense, they can be like Michael Fish’s infamous BBC weather broadcast where he told viewers not to worry about a rumoured hurricane. That was hours before the Great Storm of 1987, with saw winds reach 115mph.
One Wall Street broker (Raymond James) has an $800 price target on SpaceX stock. Personally, I think that will prove to be a ‘Michael Fish’ moment, given that it implies an implausible 600%+ surge from today’s share price.
The overall average price target is $236, which is still more than 100% higher. But returning to the weather metaphor, it will probably be lower in a few weeks when the forecasters factor in the lower price and dark clouds above the stock.
These concerns include:
- A very high valuation
- Losses due to massive AI-related capital expenditure
- Looming lockup expirations (when insiders and pre-IPO investors can start selling)
- A high level of short seller interest
No Starship boost?
Personally, I thought SpaceX would have enjoyed a boost after last week’s successful 13th launch of its gigantic Starship rocket.
In space, it practiced releasing a few V3 Starlink satellites, the next-generation ones that SpaceX wants to power a global mobile broadband network. Then the upper stage returned back to earth and splashed down gently in the ocean.
While this test was a triumph, Starship not operating reliably in future is a huge risk. Ultimately, the SpaceX bull case rests upon its success (particularly reusability).
The company admitted as much in its IPO prospectus.
If Starship does not achieve full reusability or rapid turnaround, we may experience higher per-launch costs, slower deployment timelines for our large-scale constellations (including our orbital AI compute program), delayed revenue growth, and increased overall capital requirements, and our brand and reputation may suffer. AI compute satellites at scale need full Starship reusability to be economically compelling.
SpaceX
How fast is SpaceX expected to grow?
Looking at the latest financial forecasts, SpaceX is expected to grow enormously over the next couple of years. We’re talking revenue exploding from $18.7bn to $142bn in 2028.
However, some analysts don’t expect profits to start appearing meaningfully before 2028 due to massive AI and Starship investments. This means there is significant valuation risk at today’s mega-market cap of $1.5trn, especially if growth disappoints.
Looking at this, the stock is still a bit pricey for my liking, even after the recent 50% crash. I’ll wait for the firm’s second-quarter results on Tuesday (4 August) to learn more before making any decision.
Should you invest £5,000 in SpaceX right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if SpaceX made the list?
Ben McPoland has no position in any of the companies mentioned.
This story originally appeared on Motley Fool
