Are SpaceX Bulls Deluding Themselves? This Wall Street Analyst Might Convince You So

It's been over a month since the Space Exploration Technologies (NASDAQ: SPCX) IPO, and the shine may be starting to come off.

SpaceX stock sank below its $135 IPO price for the first time on July 15, and today, it hit an all-time low, closing down 6.7% at $115.26 on a broader sell-off in the software sector.

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Wall Street, which lined up behind the stock to push the IPO in unprecedented fashion, has released a bullish set of price targets, following the end of the stock's quiet period.

Of the 13 analysts covering the stock, the lowest price target belongs to Needham at $200, implying a roughly 70% gain in the stock over the next year.

The average price target on the stock is $278, implying the stock will more than double over the next year, reaching a valuation of more than $3.5 trillion, and the Street-high target is Raymond James' $800, which would make SpaceX easily the most valuable company in the world at a valuation above $8 trillion.

A dose of reality

One analyst, who gave a buy recommendation on the stock, shared one comment that shows SpaceX investors will need an extraordinary amount of patience for the stock to pay off.

Citing the company's funding risk, a Morgan Stanley analyst said, "We forecast no free cash flow-positive year before 2035 and average external capital needs of roughly $84 billion per year from 2027 to 2034. If debt markets cannot absorb this financing need, SpaceX may need to issue equity, reduce growth investment, or slow deployment."

Assuming this is a base-case scenario, this analyst sees no positive cash flow from the company for nearly a decade. In itself, that's not entirely remarkable. Amazon founder Jeff Bezos ran that company with a famously long-term mentality, and didn't generate positive free cash flow until 2003. Bringing in more than $1 billion in free cash flow annually took the company until 2007.

However, Amazon was a much different company from SpaceX shortly after its IPO. First, it went public less than three years after it was founded, while SpaceX waited 24 years. Amazon was also growing much faster at that stage, putting up triple-digit growth before the dot-com bust. SpaceX, on the other hand, reported just 15% revenue growth in its first quarter.