Elon Musk’s space exploration company, SpaceX (SPCX), received its first “Sell” rating from CFRA analyst Keith Snyder, who cited significant execution risks tied to its reliance on Starship. Snyder also set a low price target of $115, implying 28.6% downside potential from current levels.
SpaceX made a blockbuster Nasdaq debut on Friday, June 12. The stock opened at $150, above its IPO price of $135, and surged 19.2% to close at $160.95. The rally pushed SpaceX’s market valuation past the $2 trillion mark. Snyder’s $115 price target values SpaceX at roughly $1.5 trillion, or roughly 20 times its projected 2027 sales.
Reasons Behind Snyder’s Sell Rating
Snyder believes SpaceX’s stock price already reflects very high expectations for future growth. He is concerned about the company’s aggressive expansion plans, large funding needs, and rich valuation. Snyder emphasized that SpaceX has built an impressive business, but argues that investors are assuming it will succeed at several major growth initiatives at the same time.
According to Snyder, a key concern is Starship, which is still moving from development to commercial stage. Many of SpaceX’s future plans depend on the success of Starship. These include lowering rocket launch costs, expanding the Starlink satellite network, enabling satellite-to-mobile services, developing space-based AI computing, supporting lunar projects, and future Mars missions. Snyder warned that any delays or technical problems with Starship could slow many of these growth opportunities.
Moreover, he is concerned about SpaceX’s heavy spending and cash flow pattern. The company is investing billions in launch facilities, Starship, Starlink satellites, customer equipment, ground networks, AI data centers, and future orbital AI projects.
Snyder highlighted that Starlink’s revenue per customer has been declining as the company expands into lower-priced international markets and introduces cheaper plans. He believes future growth could also face headwinds from increasing competition, regulatory challenges, network capacity constraints, and market saturation.
SpaceX’s AI Ambitions Add Further Pressure
Snyder also expressed concerns about SpaceX’s growing AI ambitions through its ties to xAI and related projects. The company is building its AI strategy around xAI, Grok, X, COLOSSUS, and future orbital AI computing, but these businesses are still in their early stages and require significant investment.
According to Snyder, investors should be cautious about assigning a premium valuation to these AI-related ventures. Investors should wait until there is more evidence of sustainable revenue growth, competitive differentiation, and margin improvement.
Is SpaceX a Good Stock to Buy?
On TipRanks, SPCX stock has a Hold consensus rating based on one Buy and one Sell rating. The average SpaceX price target of $152.50 implies 5.3% downside potential from current levels.
