Morgan Stanley saw a "unique opportunity" in SpaceX shares after their plunge

The drop in shares of Elon Musk’s aerospace company SpaceX to roughly its IPO price presents investors with a “unique opportunity” to buy them, according to Morgan Stanley, as reported by Business Insider. The bank’s analyst, Adam Jonas, assigned SpaceX shares an “Overweight” rating and set a price target of $300 per share, which is 113% higher than the closing price on August 27.

“We believe investors have a unique opportunity to ‘reassess’ SpaceX’s stock price right at the IPO level, while the fundamentals in the space, communications, and corporate AI sectors are perhaps gaining even more momentum,” Jonas said. Business Insider’s analyst calls him one of Wall Street’s leading optimists regarding shares of Musk’s aerospace corporation.

Adam Jonas identified the company’s planned construction of the $100 billion Starbase launch complex in Louisiana as the main driver of potential growth for SpaceX stock. The company expects Starbase to become the primary launch site for Starship—a space system currently under development by SpaceX that consists of a spacecraft and a super-heavy reusable rocket.

A Morgan Stanley analyst believes that the facility in Louisiana will be the largest to date and, once construction is complete, will enable the company to conduct thousands of launches annually. Construction of the spaceport will begin next year, and the first launches are scheduled for 2029.

The choice of location for the new facility is also an advantage, according to Jonas: “The state of Louisiana is uniquely positioned for southward launches over the Gulf of Mexico, which would be problematic from Florida, Texas, or California without flying directly over densely populated areas,” the analyst explained. “This will allow SpaceX to expand its capabilities for launches into polar orbits for orbital computing missions,” he added.

SpaceX CEO Elon Musk, speaking earlier about the construction of Starbase, said, “We are preparing to build a spaceport that until now has only existed in science fiction.” According to him, Starbase will be designed to launch 30 Starship missions per day.

“In our view, SpaceX shares are attractively valued, trading—based on our forecasts for fiscal year 2028—at a multiple of 10x revenue and 25x EBIT,” Jonas also noted.

After Musk’s company released its first post-IPO financial results—in which SpaceX reported a 92% year-over-year increase in quarterly revenue— but also reported capital expenditures that exceeded analysts’ expectations, Morgan Stanley’s optimism regarding SpaceX’s stock only grew, Jonas added. During this period, he said, the market observed, among other things, that the expiration of lock-up periods (the ban on early investors selling shares) did not lead to a massive collapse in SpaceX’s stock price, as Wall Street had feared.

Morgan Stanley’s optimistic outlook contrasts with the views of some other market participants who believe that Musk’s rocket and AI company is overvalued, according to Business Insider. For example, billionaire and Greenlight Capital hedge fund manager David Einhorn expressed a “bearish” outlook on SpaceX stock in a letter to investors in August.

SpaceX shares have plummeted nearly 40% from their all-time high in mid-June (above $225 per share) and briefly dipped toward their IPO price of $135 per share. They are currently trading 4% above that level—at $140.87.

Nevertheless, most Wall Street analysts are optimistic about the company’s prospects. Thirty experts recommend buying shares of Musk’s company (with “Buy” and “Overweight” ratings), seven advise holding them in a portfolio, and only three analysts recommend selling (with “Underweight” and “Sell” ratings). Their average price target for SpaceX shares—$226.26 per share—implies a 60% increase from the last closing price.

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