"The Hot Potato Game": An Early Skeptic on SpaceX's Biggest Risk — An Oninvest Exclusive

One of Wall Street’s leading skeptics regarding SpaceX, CFRA analyst Keith Snyder, warns—despite the company’s generally strong first-quarter earnings report —that: investors are still paying for a compelling narrative rather than proven business growth. In his view, one of the main risks for SpaceX is the hype surrounding artificial intelligence. The analyst shared his comments exclusively with Oninvest.

Kit Snyder remains pessimistic about the space company, a rare stance on Wall Street: three out of four analysts, as of August 6, recommend that investors buy the stock. Snyder, however, was one of the first to assign SpaceX a “sell” rating, setting a price target of $115—15% below the IPO price. According to the analyst, SpaceX’s second-quarter revenue exceeded his forecast, but “not by much.” The company reported revenue of $7.8 billion, compared with a consensus estimate of $6.9 billion.

The biggest surprise for the analyst was the growth rate of the Starlink segment—which, according to Snyder, remains the driving force behind the entire business. Revenue from the satellite internet service—SpaceX’s only profitable business— rose 66% to $4.29 billion, compared with the expected $3.83 billion. The number of subscribers doubled in the second quarter to 12 million.

The analyst reacted cautiously to the growth in the AI sector: the market was already aware of SpaceX’s three contracts with Google, Anthropic, and Reflection for the lease of AI servers, so part of this growth had already been factored into expectations.

According to the analyst’s commentary, the main risk for the company may also lie right here—in the AI segment: SpaceX is investing in artificial intelligence based on the assumption that the AI bubble will continue to grow. If that turns out not to be the case, all these investments will be wasted.

“Here’s how I see it: Why would a company like Google strike a deal with SpaceX for computing power when Google is more than capable of building its own data centers? Because they don’t want to be the ones left holding the ‘hot potato’ when the bubble bursts. By the same logic: why does Apple, the second-largest public company, prefer not to invest in AI itself but to lease it from others? “It’s a game of hot potato—and smart companies try not to be the last ones left holding it,” Snyder said.

Following the report's release, Snyder lowered his revenue growth forecast for SpaceX for 2026 but raised his estimate for 2027, shifting some of the growth to a later period. He has not yet disclosed the figures.

Overall, he sums it up this way: “Hope is not an investment strategy. I need to see real growth and a clear path to it; for now, all we see is a good story, and time will tell whether it’s fact or fiction.”

On August 4, SpaceX reported a 92% year-over-year increase in second-quarter revenue to $7.8 billion. Adjusted EBITDA increased by 191% to $3.5 billion, while the loss was nearly halved to $541 million.

The company's stock fell 12% following the release of the report: the market grew wary due to the scale of investments in AI and the anticipated pressure on the stock price resulting from the end of the lock-up period for insiders on August 6.

Against this backdrop, most Wall Street investment firms and banks are maintaining “buy” ratings and price targets significantly above current prices. Keith Snyder, however, counters that with this valuation, investors have already priced in several complex and as yet unproven scenarios for the company’s success—from Starlink to space-based data centers and the AI business.

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