SpaceX (SPCX) Stock Plunges... Wall Street Maintains '$800' Target Price

▲ SpaceX (SPCX)/AI Generated Image

Although SpaceX's stock price has fallen to its IPO level, Wall Street is maintaining a target price of up to $800.

According to MarketWatch on August 31 (local time), SpaceX raised $75 billion by offering shares at $135 each in its Nasdaq listing. The 22 Wall Street banks that participated in the initial public offering (IPO) earned a total of $500 million in fees. After listing, the stock price rose to $225 in June but then plunged to $104.83 in July. Recently, it has fallen to around $141.50, causing many investors to incur paper losses.

Despite the sluggish stock performance, Wall Street's expectations remain high. Deutsche Bank set a target price of $255, and JPMorgan projected $225 by December 2027. Citigroup suggested $200 by year-end and expected over $900 in the long term. According to FactSet, 75% of analysts covering SpaceX maintain a bullish outlook.

The most aggressive forecast came from Raymond James. Analyst Brian Gesuale set a target price of $800, approximately 500% higher than the IPO price. He projected that SpaceX would achieve annual revenue of $5.2 trillion and free cash flow of $2.63 trillion by 2035. The per-share value of this cash flow, converted to present value, is $896, and after factoring in a 10% risk, he arrived at $800.

However, massive artificial intelligence (AI) investment plans are cited as a burden. Morgan Stanley expects SpaceX to invest $64 billion in AI this year. SpaceX aims to recoup this investment within one year and achieve an annualized revenue of $100 billion by the end of 2026. However, AI computing contracts can be changed with just a few months' notice, and Anthropic and OpenAI have strong positions in the enterprise AI market.

Controversy over conflicts of interest has also resurfaced regarding Wall Street's optimism. This is because banks that received substantial fees from the SpaceX IPO are simultaneously issuing high target prices. Craig Coben, former head of Global Equity Capital Markets at Bank of America, pointed out, “There is little incentive to issue bearish opinions on popular stocks.” He explained that the relationships between investment banks, corporations, and institutional investors can make it difficult for analysts to issue negative opinions.

[Article Key Summary]

-SpaceX listed at $135 per share, rose to $225, but then plummeted to $104.83, showing high volatility.

-Wall Street maintains a target price of up to $800 despite the sluggish stock performance, with 75% of all analysts issuing bullish forecasts.

-The $64 billion AI investment plan this year and the potential for conflicts of interest among Wall Street investment banks are key points of contention surrounding the high target prices.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*