SpaceX Stock Approaches $100, a Threshold Where AI Operations Are Valued at Zero

The Numbers Behind the Selloff

In mid-June, SpaceX debuted on the public markets, raising a record $86 billion in its initial public offering. In the first three trading sessions, the stock surged nearly 50%. Since then, the ride has flipped.

That puts SpaceX uncomfortably close to a round number that has Wall Street talking: $100. At the $100 price level, Morgan Stanley analyst Adam Jonas notes that the market would essentially assign no worth - or even a negative worth - to SpaceX's artificial-intelligence operations.

Jonas assigns a $300 price target to SpaceX, with over half of that valuation ascribed to the company's AI segment. His target is the third highest among the 33 analysts Bloomberg tracks covering SpaceX. The average analyst target is roughly $232, suggesting that shares could climb to more than twice their current level.

Nearly 80% of analysts covering SpaceX recommend buying the stock. Every major bank that led the IPO - Goldman Sachs, Bank of America, Citigroup, JPMorgan Chase, and Morgan Stanley itself - issued buy-equivalent ratings.

Get the market news that matters in a five-minute read with Market Briefs, our free daily newsletter

Why the Market Is Turning Cautious

The selloff is not just about SpaceX. It is part of a bigger mood shift in the stock market.

Market participants have been shifting their focus away from tech companies that have pledged massive investments - hundreds of billions - into AI and the supporting infrastructure. An uncertain economic environment combined with rising geopolitical frictions between the United States and Iran has driven oil prices higher, stoking inflation worries and dampening risk appetite.

Morgan Stanley's Jonas wrote in a note: "Most investors we speak with significantly discount Grok & Cursor. '"Many ascribe zero or even negative value for AI given the high capex requirements relative to Space & Connectivity, largely uncertain economics, and the high degree of management time devoted to the business".'"

What Comes Next for Your Portfolio

The big date to watch is next month. The total value of the first batch of shares is about $116 billion. According to Jonas, numerous investors anticipate that SpaceX's share price will decline further, reaching $100 when the lockup expires, which would enable insider selling.

The approaching lockup expiration creates a significant overhang. With $116 billion in shares set to become tradable, the market is bracing for potential selling pressure from insiders and early investors who may want to lock in profits. This dynamic has contributed to the recent weakness and the expectation that shares could test $100.

Jonas maintains his buy-equivalent rating. He wrote that "the current disconnect between increasingly bearish investor sentiment and largely unchanged fundamentals creates an attractive entry point in SpaceX shares." He also said, "SpaceX remains uniquely positioned across launch, connectivity, and AI. '"We see the current valuation as an attractive entry point".'"

Join Market Briefs, our free daily newsletter, for a quick daily rundown of the markets