Why 1 Analyst Thinks SpaceX Stock Can Gain More Than 60% Following Its Historic IPO

There has perhaps been no more oft-discussed stock in the market in the past month than SpaceX (SPCX). Shares of the space exploration and artificial intelligence (AI) company absolutely skyrocketed out of the gate in June. However, after a few days of significant selling pressure, SPCX stock is now down about 32% from its all-time high set last week following a tremendous opening day for the hottest initial public offering (IPO) in a long time.

One analyst believes that this company could be the optimal way to play AI. Here's why — and what to make of his take and $250 price target. 

Why One Analyst Is Very Bullish on SpaceX

Oppenheimer analyst Tim Horan just put forward a new price target of $250 per share on SpaceX stock, which would imply a valuation of around $3.3 trillion. That's significant, and suggests SpaceX could be the fourth-most valuable company in the U.S. (if SPCX stock can indeed make a move toward the $250 level this year). 

With the world's first trillionaire as its CEO, SpaceX certainly has a strong following. And for many in the market today, SpaceX's success really matters. That's partly because of the growing tech allocation many investors are carrying, and the impact of large moves in SPCX stock on other high-powered tech names in the market. 

That said, Horan believes that SpaceX could be the only truly vertically integrated company positioned to disrupt AI. “[SpaceX is] the only vertically integrated company that can attack every segment of this and really disrupt an awful lot of industries,” he said.

Given the company's vast space and Starlink businesses, coupled with its frontier model Grok (and ambitions of building data centers in space), there's a lot to like about where the company is positioned, at least from a competitive standpoint. That's where we agree.

What About the Valuation?

Perhaps the biggest thorn in the side of SpaceX bulls has to be more conservative or moderate investors who still find it necessary to pound the table on valuation. I have to admit, I find myself in this group, as SpaceX's valuation overall seems extremely lofty.

Now, given the reality that SpaceX is still a nascent company and has yet to provide anything close to a meaningful track record of growth (with profits seemingly years away), there are plenty of reasons for discussion around what it should be worth. Indeed, the $25 trillion total addressable market (TAM) Horan and other analysts have pointed out is a massive number. To me, this number is not likely reasonable, although I've been fairly criticized in the past for not thinking big enough.

Of course, we'll have to see how things play out from here. For many who believe in the “Musk effect” — the effect of having this singular CEO drive a vision that can motivate thousands and create tremendous value for shareholders — there could be a growth argument to be made here. I'm not going to dispute that. But at nearly 110 times sales after the recent dip over the past week, some investors do appear to be paying more attention to the underlying fundamentals of prospective investments than they have previously.

What Do Other Analysts Think SpaceX Is Worth?

As it turns out, Horan really isn't that far off from the average analyst assessing SpaceX. Currently, the mean price target on SPCX stock sits at $212.67 per share, implying about 39% potential upside from current levels. 

I think the reality of whether or not SPCX stock will ultimately hit these levels has less to do with the fundamentals and more to do with market sentiment and investor appetite for risk. For now, the overall risk level investors appear comfortable with is diminishing somewhat, and there are plenty of other stock and bond issuances from mega-cap tech companies that could weigh on demand for a low-float stock like this one. We'll have to see, but I'm going to have to “take the under” on the predictions Horan and other analysts are making in this case.