Wall Street embraced SpaceX with a bullish tone Tuesday following its blockbuster IPO. All except Moffett Nathanson, the only sell-side researcher who boldly predicted that Elon Musk’s rocket company’s stock price would fall over the next year. Moffett Nathanson initiated coverage of SpaceX with a neutral rating and price target of $131, implying an 18% downside from SpaceX’s Monday closing price of $160.42. The call is a departure from a series of bullish initiatives hailing the company’s long-term growth prospects despite its $2 trillion valuation. The research boutique said even a neutral rating on the stock could be too generous. “Initiating coverage with a flashing red Sell rating is easy, and some might argue prudent,” the company said in a note to customers. Since its June 12 IPO, SPCX YTD Mountain SpaceX MoffettNathanson said traditional valuation frameworks have failed to capture potential investors assigned to SpaceX’s dominance in rocket launches. “As of this writing, there is no reliable financial model to support a valuation of approximately $2 trillion; our own valuation certainly does not exist,” the report said. Analysts were skeptical of some of the forecasts highlighted by the company and bullish investors. They called the nearly $30 trillion estimate for SpaceX’s addressable market cap “ridiculous,” questioned predictions for device-direct wireless services, and said Musk’s goal of deploying 100 gigawatts of computing power per year in orbit by the end of 2029 exceeds the capacity of data centers installed globally today and will require material inputs that likely won’t exist by then. Still, the company stopped short of an outright bearish recommendation as it believes investors are evaluating SpaceX as an option for future business that has yet to be envisioned. Moffett-Nathanson said the bigger threat over the long term is not whether SpaceX is technologically viable, but whether regulators will eventually challenge the company’s growing dominance in launch services and the vertically integrated business it has built on that advantage. But analysts say these regulatory risks are likely years away. “For now, there are good reasons to be skeptical about the forecast, but there are also good reasons to be optimistic about the optionality that comes from the space sector’s huge moat and undeniable flywheel, acknowledging that today’s astronomical (yes, pardon the pun) valuations are probably not entirely unreasonable after all,” the analysts wrote.
