Space Exploration Technologies Corp. (NASDAQ:SPCX) just became the fifth-most-valuable company on the planet.
The first Wall Street analyst to put a rating on the stock thinks it is worth less than half what investors are paying.
This week, Keith Snyder at CFRA initiated coverage on SPCX with a Sell rating and a $115 price target, implying roughly 46% downside from current levels, according to Benzinga Analyst Ratings.
It is, so far, the only formal rating on a stock that has jumped more than 55% since its June 12 debut, to a market value near $2.75 trillion.
The bearish call stands out in a market where many investors have embraced Elon Musk‘s vision of combining reusable rockets, global satellite connectivity and artificial intelligence under a single corporate umbrella.
“SpaceX is no longer best understood as a pure-play launch company,” Snyder said in a recent CFRA presentation.
Instead, he views the company as a vertically integrated platform spanning launch services, Starlink connectivity and AI infrastructure.
Snyder’s case is not that SpaceX is a bad company. It is that the price now bakes in businesses that barely exist yet.
Starlink Is The Real Business
Snyder highlighted that SpaceX has built a formidable business around Starlink, which has evolved into the company’s primary revenue and profit engine.
According to SpaceX’s S-1 filing, the Connectivity segment generated $11.4 billion in revenue in 2025, compared with $4.1 billion from the Space segment and $3.2 billion from AI operations.
Starlink serves approximately 10.3 million subscribers across 164 countries and territories, making it one of the world’s largest satellite broadband networks.
Connectivity operating income climbed to $4.4 billion in 2025 from just $469 million in 2023, demonstrating significant operating leverage as the network scales.
CFRA views Starlink as a genuine competitive advantage because SpaceX controls the entire value chain, from satellite manufacturing and launch services to network operations and customer relationships.
“Starlink is the profit driver for the company,” Snyder said.
The Problem Is In SpaceX AI Business
While Starlink generates substantial cash flow today, Snyder indicates that investors are increasingly paying for what SpaceX might become rather than what it currently is.
The company’s AI segment includes Grok, X, advertising, subscriptions, data licensing and massive computing clusters known as COLOSSUS and COLOSSUS II.
Management has framed AI as the largest long-term opportunity, estimating a total addressable market of roughly $26.5 trillion for AI-related businesses.
Yet, Snyder isn’t buying those projections.
During a webinar on Friday, he described SpaceX’s overall $28.5 trillion total addressable market estimate as “a complete fantasy,” noting that the figure is roughly equivalent to the entire annual economic output of the United States.
“I present this more as management’s ambitions and not a forecast that you could plug straight into a model,” Snyder said.
xAI lost more than $6 billion from operations in 2025.
CFRA indicates that much of SpaceX’s current valuation effectively reflects future AI success that has yet to be proven commercially.
The math is where the Sell comes from.
Using a sum-of-the-parts approach — valuing each business on its own and adding them up — Snyder pegs launch near $188 billion, Starlink near $159 billion and xAI near $877 billion, for a 2026 fair value of about $1.22 trillion.
That is roughly $530 billion below the $1.75 trillion at which the IPO was priced, and well under half of where the stock trades now.
Even his most bullish 2027 scenario, which assumes xAI builds and leases out a new COLOSSUS cluster, tops out just shy of $2 trillion. His base case sits around $1.5 trillion.
He values xAI at 30 times revenue and still cannot reach the market price.
Massive Spending, Negative Free Cash Flow
Another concern is capital intensity.
Despite generating $6.8 billion in operating cash flow during 2025, SpaceX spent $20.7 billion on capital expenditures, resulting in approximately $14 billion of negative free cash flow before portfolio adjustments.
The spending reflects simultaneous investments in Starship development, next-generation Starlink satellites, direct-to-cell technology, AI data centers and future orbital computing infrastructure.
CFRA acknowledges that SpaceX possesses significant technological advantages, particularly in reusable rockets and satellite deployment. However, the firm believes investors are underwriting multiple ambitious projects at once.
“This is a high-quality business, but not yet a low-risk one,” Snyder wrote.
The Musk Factor
The third pillar is control. Through supervoting Class B shares, Musk holds about 85% of the voting power while owning roughly half of the economic interests, leaving public shareholders little real say.
“You might as well call the company Elon X,” Snyder said.
The overall bearish thesis does not question SpaceX’s innovation. Rather, it questions whether the stock price already assumes success across nearly every major initiative.
Starlink has proven it can generate revenue and profits. Falcon 9 has established itself as the dominant launch platform globally. But Starship remains in development, orbital AI remains theoretical, and xAI’s long-term economics are still uncertain.
For CFRA, that combination creates an unfavorable risk-reward profile at current levels.
Photo: Dimitris Barletis / Shutterstock
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