Morgan Stanley says SpaceX at $100 would price AI business at zero

Morgan Stanley said SpaceX shares are approaching a level that would imply investors assign no value to the company’s artificial intelligence business following a sharp decline from its post IPO peak.

Analyst Adam Jonas said many investors expect the stock to fall toward $100 as the first restrictions on insider sales begin expiring next month. At that price, SpaceX would carry zero or negative implied AI value while its space and connectivity businesses would also be valued below Morgan Stanley’s estimates.

“We believe the current disconnect between increasingly bearish investor sentiment and largely unchanged fundamentals creates an attractive entry point in SpaceX shares,” Jonas wrote in a Friday note.

SpaceX shares closed Friday at $115.07 after falling 2.7% during the session. The stock has dropped nearly 50% from its June peak and remains below the $135 price set in its record initial public offering.

The company raised $86 billion through the offering, but only about 5% of its shares initially became available for public trading. Up to 911.5 million additional shares could become eligible for sale shortly after SpaceX reports its first quarterly results, potentially increasing pressure on the stock.

Jonas maintained an Overweight rating and a $300 price target. More than half of his valuation is tied to SpaceX’s AI operations, which include Grok and Cursor, according to the report.

The analyst said investors are heavily discounting the AI segment because of its large capital requirements, uncertain economics and the amount of management attention devoted to the business.

The selloff has coincided with a broader retreat from technology companies committing large sums to artificial intelligence infrastructure. Higher oil prices, inflation concerns and tensions between the US and Iran have also weakened demand for risk assets.

Wall Street remains broadly positive on SpaceX. Twenty seven of the 32 analysts tracked by Reuters recommended buying the stock as of last week, while Morgan Stanley’s target remains among the highest on Wall Street.

Jonas said SpaceX remains uniquely positioned across launch services, connectivity and artificial intelligence, adding that its current valuation offers an attractive entry point.