Morgan Stanley Outlines What to Watch for in SpaceX's First Report

Morgan Stanley outlined five key points that, according to the bank’s analysts, may come up during the conference call following SpaceX’s quarterly earnings presentation on August 4, and warned of possible surprises. This report will be the first since the company went public and could prove to be a serious test for the publicly traded company, notes Business Insider.

Morgan Stanley analysts believe that SpaceX's financial results will fall slightly short of Wall Street's expectations. According to the bank’s estimates, the company’s revenue will total $6.75 billion, compared to a consensus forecast of $6.9 billion, while its loss will be $1.7 billion, compared to $1.6 billion. Morgan Stanley does not believe these figures will significantly alter the long-term trajectory of SpaceX’s stock, but warns that in the near term, the stock will be influenced by technical factors and investor sentiment.

To describe the situation on the stock market, the Morgan Stanley team uses “Max Q”—a space industry term associated with the company—which refers to the point of maximum aerodynamic pressure during a rocket launch. As the bank’s analysts point out, SpaceX’s stock is currently experiencing similar strain due to the unprecedented volume of shares that will be unlocked in the near future. August 6 marks the end of the first so-called lock-up period, which could trigger a wave of insider selling: approximately $100 billion worth of shares could become available for sale on the market.

Morgan Stanley expects the upcoming conference call with investors to focus on artificial intelligence. “We expect that, of the three business areas, AI will receive the most attention during the call,” the analysts wrote. The bank believes investors should not expect financial details regarding the pending acquisition of the startup Cursor. Nor should they expect precise forecasts regarding the rollout pace of Starlink broadband internet. The company is expected to confirm its plans to launch commercial cargo delivery via Starship vessels by the end of the year and provide details on the expansion of its computing capacity in Memphis.

According to Morgan Stanley, the only potential negative surprises for the market could be overly optimistic forecasts for capital expenditures, plans to revise cloud computing contracts, and signs of a slowdown in the influx of new Starlink subscribers.

The bank's analysts remain optimistic about SpaceX's long-term prospects: they have reaffirmed their "buy" rating on the company's stock and a price target of $300, which implies upside potential of 170% from current levels. According to Morgan Stanley’s calculations, the stock’s current price significantly undervalues its latent potential related to the development of AI technologies.

After surging following its initial public offering on June 12, SpaceX’s stock subsequently lost more than $1 trillion in value and is now trading below its IPO price; the expiration of insider selling restrictions could trigger a sharp spike in volatility, Business Insider reports. Since market participants do not expect the company to suddenly return to profitability, early investors may rush to lock in profits, the publication warns. According to data from the Barchart platform, in the week leading up to August 7, the implied volatility of SpaceX shares—which reflects market expectations regarding future price fluctuations—reached 148.7%, more than double the average value for the entire trading period.

CNBC noted that "bearish" bets against SpaceX have surpassed the volume of short positions against Tesla, which has long been one of the most popular targets for short-selling on Wall Street. According to S3 Partners, short sellers now hold positions in about one-third of SpaceX’s shares outstanding. When the stock first began trading on the exchange, that figure was 5–7%.

This article was AI-translated and verified by a human editor