Cathie Wood Just Doubled Down on SpaceX. Instead of Panicking About the Sell-Off, She Is Betting Big on the Long-Term Potential of SPCX Stock.

SpaceX (SPCX) has emerged as one of the most watched stocks in the market due to the historic IPO performance. Following several sessions of gains immediately after going public, the stock has fallen hard and lost almost 25% of its value in just three days, erasing more than $600 billion in market value.

Nevertheless, while many investors decided to bail out of the stock, one well-known growth-oriented investor opted to do quite the opposite. Cathie Wood's ARK Invest took advantage of the weak performance to boost its stake in SpaceX, indicating that she sees this decline as an opportunity rather than a warning sign.

About SpaceX Stock

SpaceX is a space transport, satellite communications, artificial intelligence, and aerospace technologies company headquartered in Hawthorne, CA. The business is led by CEO Elon Musk and includes operations in Starlink satellite internet, launch services, national security programs, and developing AI solutions. Although SpaceX became public only a few days ago, it already sports a market capitalization of almost $2.02 trillion.

The stock experienced very unusual volatility after the IPO. Currently, SpaceX shares are trading around $156 after declining to $147 today, Tuesday. Despite the sharp decline in price, the stock remains one of the largest public corporations in the world. Nevertheless, SpaceX still trades 31% below its 52-week high of $225.64.

Currently, the biggest question about SpaceX concerns its valuation. With a price-to-sales ratio of 129.54 times, SpaceX's valuation is higher than the majority of its peers in the technology and aerospace sectors. Moreover, the company is unprofitable at the moment with a negative profit margin of 26.4%, and thus other popular valuation metrics like the price-to-earnings ratio cannot be applied. The bulls think that investors pay for decades of growth ahead in satellite communications, AI infrastructure, and space commercialization, while the bears feel that expectations are too high.

Cathie Wood Buys the Dip as SpaceX Extends Sell-Off

According to ARK Invest's daily trading disclosures, the firm's funds purchased an additional 210,121 SpaceX shares on June 22. The biggest buy was made by the ARK Innovation ETF (ARKK) which boosted its stake by 131,837 shares, followed by the ARK Autonomous Technology & Robotics ETF (ARKQ), ARK Next Generation Internet ETF (ARKW), and ARK Space Exploration & Innovation ETF (ARKX).

This buying activity comes after a massive buying spree by ARK following SpaceX's IPO on June 12. The firm then bought around 3.29 million shares in the SpaceX through its ETFs, making SpaceX one of the most bullish new positions for ARK.

Nevertheless, the timing is important. On Monday, SpaceX shares declined by 16.4%, the sharpest one-day decline since the company became public, leading to declines of almost 25% from the recent high. The sell-off caused huge losses in the market value of SpaceX, and many investors started to think that the excitement over the IPO may have been excessive.

Nevertheless, it looks like ARK is more interested in the long-term potential than the short-term price action. Cathie Wood likes disruptive technology firms which create new markets, and SpaceX's mix of Starlink, launch services, defense programs, and AI fits this description well.

What Do Analysts Expect for SpaceX Stock?

Despite the recent sell-off, Wall Street analysts remain bullish overall with a “Moderate Buy” rating consensus. Analysts currently carry a bullish consensus opinion on SpaceX, although the valuation is debatable for the company, as it went public relatively recently.

The mean analyst price target for SpaceX currently stands at $221.20, which implies potential upside of 41.7% from the recent trading level. The Street-high target of $401 implies potential upside of 156.9%, while the lowest price target of $115 indicates possible downside risks.

The wide range of the analysts' price targets reflects the uncertainty regarding SpaceX's valuation. The bulls see the company as one with dominant positions in satellite internet, launch services, and AI infrastructure. The bears feel that despite the sell-off, much of this future success has already been priced in.

In any case, Cathie Wood has made her choice clear. Instead of viewing the sell-off as a reason to sell, ARK Invest uses it as an opportunity to buy more shares of one of the most exciting growth stocks in the market right now.