SpaceX (NASDAQ: SPCX) stock has declined over the past two months, leaving investors who bought the shares in September facing a paper loss despite the company’s strong business growth.
At its press-time price of $139, SpaceX stock is down approximately 6.1% from the $148 level recorded on September 14.
This means an investor who put $1,000 into the stock at the time would now have approximately $939, representing an unrealized loss of about $61.
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SpaceX stock fundamentals
The decline comes despite SpaceX reporting strong third-quarter financial results. Notably, the company reported revenue of $14.6 billion, representing a 161% increase from the $5.6 billion recorded in the same period last year.
Net income reached $4.4 billion, compared with a $1.1 billion loss a year earlier, while adjusted EBITDA climbed 306% to $8.8 billion.
The company’s AI business has emerged as an increasingly important growth driver, alongside its established rocket launch operations and Starlink satellite internet service.
However, investors have become increasingly concerned about the substantial capital required to expand its AI infrastructure, particularly as uncertainty surrounding data center investments weighs on technology stocks.
Indeed, SpaceX announced on November 12 that it plans to invest more than $74 billion in two supercomputing campuses in Texas and Arizona.
The projects represent an aggressive expansion of its AI ambitions but also introduce considerable execution, financing, and regulatory risks.
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Beyond AI, SpaceX’s Starship program remains another potential stock catalyst. The company is preparing for its 15th flight test, aiming to recover both the Super Heavy booster and upper-stage spacecraft using its launch tower in South Texas.
A successful test could demonstrate the commercial potential of fully reusable rockets, lowering launch costs and expanding SpaceX’s satellite and AI infrastructure capabilities.
However, further delays or unsuccessful tests could weigh on investor sentiment.
Wall Street remains bullish on SpaceX stock
Despite the recent weakness, analyst expectations suggest that SpaceX could have considerable room to recover.
According to Google Finance data, 33 analysts covering the stock have an average 12-month price target of $246.30, representing potential upside of approximately 77% from its latest price of $139.11.
The consensus rating is ‘Strong Buy’, with 27 ‘Buy’ recommendations, five ‘Hold’ ratings and one ‘Sell’ recommendation.
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Morgan Stanley’s $300 target represents potential upside of approximately 116%, while Deutsche Bank maintains a $250 target. Stifel, meanwhile, has a more conservative $190 price target.
Nevertheless, not all analysts share this optimism. Some have questioned whether SpaceX’s ambitious AI expansion and growth prospects are already reflected in its valuation.
Is SpaceX a sell or hold?
For investors who bought SpaceX shares two months ago, the decision to sell or hold largely depends on their investment horizon and tolerance for volatility.
The bullish case rests on the company’s rapidly expanding AI operations, Starlink’s recurring revenue, and its established position in the commercial space industry.
Further progress with Starship could also unlock additional growth opportunities by lowering launch costs and increasing payload capacity.
Nevertheless, the stock faces considerable valuation risks, particularly if AI infrastructure spending fails to generate the returns investors anticipate.
Regulatory obstacles, execution challenges, and changing investor sentiment could also prolong the downturn.
Overall, the recent decline alone does not necessarily justify selling, particularly for investors with a long-term investment horizon.
SpaceX continues to demonstrate substantial business growth, while analyst expectations indicate that Wall Street sees significant recovery potential.
Featured image via Shutterstock
