SpaceX shares continue to slide. What’s the next catalyst for a recovery?

Space Exploration Technologies Corp (NASDAQ: SPCX) founder Elon Musk is on record as saying the newly listed company will be “worth more than Earth if we achieve our goals”. However, investors who bought shares in the initial public offering are now deeply underwater.

SpaceX shares plumbing new lows

SpaceX shares fell another 6.7% overnight to close at US$115.26, well below the US$135 initial public offer (IPO) price and more than US$100 lower than the high of US$225.64 achieved in the days following the company’s listing on the US NASDAQ exchange.

There has been no specific market-moving news putting downward pressure on the shares; however, the company’s IPO disclosures show that two of its three divisions continue to burn cash, with only the Starlink connectivity division making money.

With that in mind, investors will be focused on the company’s first earnings report, which it announced this week will be scheduled for August 4.

According to US business news outlet CNBC, this will also trigger the ability for insiders to begin trading a portion of their shares, which could put further downward pressure on the share price.

US news outlets have also widely reported that the company has been the target of short sellers, with as much as a third of its public float being shorted.

Mr Musk took aim at the short sellers in a post on X last week, where he declared, “The survival probability of firms who maintain a significant short position in SpaceX over time is very low”.

Market watchers see longer-term upside in SpaceX shares

Analysts are almost universally bullish about the company’s prospects, with Yahoo reporting that, of the 13 analysts following the stock, the lowest price target is US$200.

A UBS report published in Australia earlier this month put a price target of US$210 on the company.

The UBS team said that as the company brings its Starship rocket system into service, the total addressable market for the company could increase to US$30 trillion.

UBS added:

We view SpaceX as an unparalleled set of assets with a multifaceted return profile and multiple drivers of upside for long term, risk tolerant investors. Starship – the most advanced heavy-lift, re-usable rocket – is the foundational technology that unlocks opportunities in launch, communications and AI compute creating a total addressable market nearing US$30T. Starship would effectively give SpaceX commercial control over access to space for the next decade, and we expect revenues/EBITDA to grow at a ~70%/90% CAGR through ’31 to US$660B/US$512B as opportunities in AI and connectivity scale and rapid reusability drives the launch cost per kilogram to just $200 from $1K currently ($50K for the space shuttle).  

UBS said while it was not factored into their base investment case, SpaceX was “uniquely positioned to exploit off planet business models as they emerge, providing investors a call option as Elon Musk looks to fulfill his vision of making life multiplanetary”.

The post SpaceX shares continue to slide. What’s the next catalyst for a recovery? appeared first on The Motley Fool Australia.

More reading

• 9 ASX 200 shares with refreshed buy ratings this week
• 3 ASX 200 stocks smashing new 52-week-plus highs today
• Why is this ASX lithium stock racing 9% higher today?
• Why Sandfire, Domino’s and Macquarie shares are making waves on Thursday
• 8 ASX 200 shares downgraded by experts this week

Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.