A bearish outlier in a largely optimistic market

A new Sell rating from DZ Bank analyst Markus Leistner has put the focus back on the central question facing SpaceX investors: how much of the company’s long-term promise is already reflected in its share price?

Leistner initiated coverage with a $100 price target, below the $134 closing price reported for August 20. The call stands apart from a market in which most published recommendations remain positive. It is therefore less important as a consensus forecast than as a clear statement of the bear case: SpaceX may have exceptional assets, but the investment needed to develop its next businesses could overwhelm near-term financial returns.

The contrast is stark. Other analysts have published much higher targets, including $200 from Mizuho, $210 from UBS and $300 from Morgan Stanley. The spread illustrates the unusual uncertainty embedded in the stock. Investors are not simply debating next quarter’s revenue. They are assigning very different values to satellite connectivity, launch services, AI infrastructure and future space-based computing projects.

Growth is real, but so is the financing challenge

SpaceX’s second-quarter results demonstrated why the bull case remains compelling. Revenue rose 92% year on year to $7.8 billion, while the connectivity segment generated $4.3 billion in sales. The company also reported a narrower-than-expected net loss of $541 million.

Yet the figures also showed why sceptics are concerned. Capital expenditure reached about $18.4 billion in the quarter, with the largest share directed towards AI computing infrastructure. Management indicated that spending would remain elevated as it develops launch systems, expands satellite capacity and builds computing resources.

This makes SpaceX a complex valuation exercise. Its connectivity operations can produce recurring revenue and potentially finance part of its expansion. But the market is also being asked to fund projects whose returns may be distant, technically uncertain and capital intensive.

The issue is not whether the company has ambitions large enough to require substantial investment. It plainly does. The question is whether revenue growth, margins and access to external capital can rise quickly enough to support that investment without prolonged dilution, mounting debt or a lower market valuation.

Lock-up expirations add a market-structure risk

The Sell call arrived after a turbulent period following SpaceX’s June public-market debut. The initial offering priced shares at $135, and the stock rose sharply in its first days of trading before retreating below the offering price in early August.

A major reason has been the staged end of lock-up restrictions. These provisions initially limited sales by early investors, employees and insiders. When the first large tranche expired in August, more than 900 million shares became eligible for trading, substantially increasing the potential supply of stock.

The immediate effect was not a straightforward collapse: shares rose on the first major unlock day despite exceptionally heavy trading. That outcome is a reminder that an unlock creates the option to sell, not a requirement to do so. Nevertheless, the process matters because further releases are scheduled over time. Investors must assess not only SpaceX’s operating performance but also how a growing tradable float affects demand, volatility and price discovery.

For a newly listed company, this distinction is meaningful. A relatively limited float can amplify upward moves after an IPO, while a wider float can expose a valuation to more sustained selling pressure if early holders decide to diversify or take profits.

The valuation debate is ultimately about execution

Leistner’s target is not an argument that SpaceX lacks competitive strengths. The company has a leading position in reusable launches, a large satellite-internet network and a platform that connects launch capacity with downstream communications services. Those advantages support the optimistic forecasts from many analysts.

The bearish position is that these strengths are insufficient to validate a premium valuation if the company’s AI and infrastructure plans require years of negative free cash flow. Piper Sandler has made a related, though less negative, point: it sees a constructive multi-year thesis but expects lock-up expirations and the scale of future capital spending to limit nearer-term upside.

The prospectus adds an additional governance consideration. SpaceX has a dual-class share structure, and Elon Musk retains majority voting power after the offering. That allows the company to pursue a long-horizon strategy with less vulnerability to short-term shareholder pressure. At the same time, it gives outside Class A investors limited influence over strategic choices, capital allocation and potential future transactions.

What investors should watch next

The disagreement over SpaceX is unlikely to be settled by one analyst report or one volatile trading session. Four indicators will be more consequential:

  • whether connectivity growth can continue to convert into durable operating cash generation;
  • whether AI-related spending produces identifiable commercial returns rather than only higher capital requirements;
  • the effect of future lock-up expirations on the available share supply; and
  • whether the company can finance expansion without materially worsening shareholder dilution or debt risk.

The $100 target should therefore be viewed as a stress test for the prevailing narrative, not a definitive prediction. SpaceX is valued as a company capable of extending its leadership well beyond rockets and broadband. The bear case is that the cost, timing and uncertainty of that expansion leave little room for execution disappointments. The coming quarters will show whether growth begins to close that gap.

Sources