SpaceX shares gain 6% in pre-market 📈

SpaceX continues its rally, gaining another 6% in premarket trading and approaching the USD 170 mark per share following its record-breaking IPO last Friday. The company’s market capitalization has already surpassed USD 2 trillion, fueling an intense debate over whether such a valuation is justified and what lies ahead for what has become the market’s hottest stock.

Will reality catch up with SpaceX?

SpaceX ended 2025 with losses exceeding USD 5 billion, while capital expenditures continue to accelerate. In the first quarter of 2026 alone, the company spent USD 10.1 billion, compared with USD 4.1 billion during the same period a year earlier. A significant portion of that spending was directed toward artificial intelligence infrastructure.

Supporters of the stock point to the company’s technological leadership and exceptionally high barriers to entry. However, valuing today what a company may potentially earn 15 or even 20 years from now inevitably introduces a substantial degree of speculation. To put the scale into perspective, for SpaceX shares to double from current levels, the company’s market capitalization would need to surpass Alphabet (Google), a scenario that appears difficult to justify given the relatively small size of SpaceX’s current business compared with the tech giant.

CFRA initiated coverage of SpaceX with a Sell rating and a USD 115 price target, implying nearly 30% downside from Friday’s closing price. According to the firm, investors are currently pricing in an extremely aggressive growth scenario while overlooking significant execution risks and the company’s massive capital requirements.

Morningstar is even more skeptical, estimating the fair value of SpaceX at just USD 63 per share, implying downside of roughly 70% from current levels.

The biggest questions revolve around the company’s ability to convert ambitious projects into tangible cash flows. SpaceX continues to present investors with long-term visions that have yet to be reflected in financial performance. Particular attention is focused on the company's plans to develop orbital data centers designed to support AI workloads.

Investors are increasingly demanding more concrete information regarding the commercialization timeline of these initiatives. Some analysts have also highlighted the limited disclosure regarding execution risks and corporate governance contained in the IPO prospectus. As the company's valuation grows, so too will expectations for transparency.

Space is difficult to value

Despite these concerns, part of the market believes the current valuation can be justified when viewed through a very long-term lens. NewStreet Research initiated coverage of SpaceX with a USD 165 price target. According to its analysts, the company should be evaluated over a 20-to-25-year horizon rather than through the framework of a typical equity cycle. Many investors enthusiastic about the "new space" sector likely share this perspective.

Ultimately, stock prices are determined by investors willing to commit capital, not by analysts issuing skeptical reports. Criticism alone is rarely sufficient to derail a strong momentum trade, particularly when many market participants acknowledge that the company's long-term potential may indeed be enormous. Current valuation levels incorporate a substantial premium for SpaceX's dominant position within the U.S. space industry. This is a market that remains exceptionally difficult to enter, requiring vast amounts of capital, technological expertise, risk tolerance, and years of execution.

Jeff Bezos recently received a painful reminder of these challenges after Blue Origin’s massive New Glenn rocket — a competitor to Falcon Heavy — reportedly exploded, likely causing delays of several months to the program. Events like these highlight just how difficult it is to replicate SpaceX's capabilities. It is equally challenging to assign a value to the company’s technological know-how, accumulated launch experience, and regulatory approvals, all of which represent significant competitive advantages. According to NewStreet, most of the key building blocks required for future success are already being developed. SpaceX bulls argue that the company remains effectively unmatched in orbital launch capabilities.

Analysts estimate that SpaceX’s technological lead over competitors could be as much as a decade. Such advantages are inherently difficult to quantify, which naturally translates into a valuation premium. Starship is expected to dramatically increase the amount of payload that can be transported into orbit compared with existing launch systems. Greater launch capacity could become the foundation for the continued expansion of the Starlink network.

Direct-to-cell satellite communications projects are heavily dependent on SpaceX’s launch capabilities. Similarly, orbital AI data centers would require a substantial increase in the amount of infrastructure that can be deployed into space. According to NewStreet, SpaceX could account for 90% to 95% of global launch capacity within the next four to five years. It remains unclear whether those estimates fully incorporate China's rapidly advancing space program, which has become an increasingly important factor in the long-term competitive landscape.

SPCX stock chart (M5)

Source: xStation5