Morgan Stanley and Michael Burry clash over SpaceX stock valuation

SpaceX stock remains sharply unsettled

The Motley Fool reports that Space Exploration Technologies, trading under the ticker SPCX, has stayed highly volatile. The stock is about 17% below where it finished on its first day of trading in early June. The article says the shares have at times fallen by more than one-third during the year before rebounding by more than 50%.

Wall Street is broadly positive, but far from uniform

According to The Motley Fool, most analysts covering SpaceX are constructive on the stock. Out of 35 analysts, 29 have buy ratings, six have hold ratings, and one has a sell rating. The consensus price target is around $250, which the article says points to more than 86% upside. Even so, the note says the bullish group is split on valuation, with some targets below $200 and others as high as $500.

Morgan Stanley sees a $300 target and links it to AI

The Motley Fool says Morgan Stanley has a $300 price target, which it says implies more than 124% upside over 12 months. The firm’s bullish case centers on artificial intelligence, which SpaceX’s IPO prospectus says makes up more than 90% of the company’s total addressable market. Morgan Stanley also argues that SpaceX’s different businesses can reinforce one another. Its analysts said, “We see the company as one of the few platforms that can link real estate in orbit, global connectivity, and compute capacity into one infrastructure stack.”

The article says Morgan Stanley views the AI segment as the part of the story with the biggest growth potential. It adds that the bank expects rockets and satellites to help generate AI revenue. In that view, Starship is important because it could lower the cost of putting satellites into orbit at scale. Those satellites could then support more connectivity through Starlink and could also be used for orbital data centers.

Burry says the valuation is too high

The Motley Fool reports that investor Michael Burry disagrees with that outlook. Burry, a hedge fund manager known for profiting from bets against the U.S. housing market during the 2008-09 financial crisis, said this summer that nothing in SpaceX’s S-1 suggested it was worth $1 trillion, let alone $2 trillion. After SpaceX’s valuation rose further after its IPO, he became more cautious. Burry later said that at a $2.8 trillion market cap, SpaceX had less than $20 billion in total revenue and described it as a small space company, a niche telecom, a troubled social media company, and a “Coreweave-light.” He said any further move higher would be based on hype and technicals.

Morgan Stanley’s bear case leaves room for downside

The Motley Fool says Morgan Stanley’s own research acknowledges a much lower valuation in a pessimistic scenario. The firm’s $75 bear case assumes Starship slips to 2029 and that AI monetization and deployment are slower than expected, with Space and Connectivity accounting for about 90% of the valuation. Morgan Stanley also says one of the biggest risks is whether SpaceX can secure the capital it needs. The article says the bank’s bullish view depends on SpaceX raising large amounts of new funding through the rest of the decade, while Burry’s skepticism rests on how difficult it is to count on both the success and synergy of all three business segments along with continued access to inexpensive capital.