SpaceX stock just handed Wall Street a lesson in bad timing.
Days after analysts at more than a dozen banks rolled out price targets that were almost uniformly bullish, the shares tumbled below their $135 IPO price for the first time, then kept falling toward $125. The reversal is jarring for a company whose Nasdaq debut in June was the largest in U.S. history: shares that peaked near $211 within three days of trading have now shed nearly 60% of their value, leaving even early allocation winners facing a loss if they sell today.
The big retreat blindsided the top Wall Street backers. Early-ish in July, analysts at eighteen of the banks that handled probably the most celebrated IPO of all time issued their outlooks for SpaceX. The research notes pretty much flooded all at once, as is typical 25 days after a new issue starts trading.
The SpaceX deal provided a giant payday for these underwriters. All told, they pocketed $500 million before expenses representing a 0.66% fee on the $75 billion raised. In a typical offering, says Jay Ritter, the University of Florida professor who’s the world’s leading expert on IPOs, the banks tally all of their expenses, subtract that number from the total take, and divide the net figure by their percentage allocation of shares. For example, five banks, Goldman Sachs, Morgan Stanley, J.P. Morgan, Citigroup and Bank of America got assigned roughly 85% of shares for sale, and hence would garner the lion’s share of the half-a-billion, less costs that are likely a small fraction of that bonanza.
The SpaceX offering featured twenty-three banks, a crew that ranged from the aforementioned giants to asset managers Bernstein and Mirae of South Korea. Of the group, five didn’t provide targets or ratings at all, a subset that includes Santander of Spain and Barclays of the U.K. A sixth, William Blair, awarded only an “outperform” recommendation, and didn’t posit a future price.
The other seventeen did forecast a specific number 12 to 18 months out, the standard period for Wall Street price targets. The highest call came from Blair’s fellow brokerage Raymond James at $800; the lowest was Stifel’s prediction of $190. The effective benchmark for gauging the percentage increase each target represented is $160, where SpaceX closed on July 6, the day before most of the projections emerged. Hence, Raymond James heralded a 400% explosion by 2031, and Stifel at the bottom of the range augured a 19% rise.
So even then, one extreme was mildly favorable, the other wildly enthusiastic. Negative or neutral didn’t appear. The 15 banks in between all tilted towards big time fandom. Of those, the only one that could qualify as an “outlier” was Morgan Stanley, which topped the group at $300, a number 90% beyond the $160 SpaceX reached the day prior to the release of most projections. The fourteen others are tightly packed. Nine are crammed between $200 and $225, a variance of just 12.5%, while another five cluster between $235 and $250, a range of only 6.3%.
The median is $225 for all 18 banks that set targets—in fact, four picked that precise number, among them J.P. Morgan and Deutsche Bank. When the estimates emerged, getting to that mid-point required an advance of 41% from that $160 pre-forecast level. Indeed, the underwriters used some uncharacteristically florid language in lauding SpaceX’s prospects. Morgan Stanley praised its ecosystem as “AI’s final frontier,” while B of A credited Elon Musk’s creation for “paving the superhighway to the stars.” For Raymond James, its achievement will rival such breakthroughs as the dawn of electrification, railroads and the internet.
The banks’ me-too predictions show they have absolutely no idea where SpaceX is headed
The universal optimism is hardly surprising, given that the banks marketed the shares to their clients as a great deal. In effect, the vast preponderance of closely-aligned projections shows that the underwriters are punting. “The analysts at one bank appear to be highly influenced by the prices the other analysts are predicting,” says Ritter. Their method, he notes, appears to be the following: Take the current price, and tack on a big increase similar to everyone else’s, and for the most part, avoid standing out from the crowd.
The rub: The analysts are effectively stacking a big bulge on a valuation that when they proffered their forecasts, was already astronomical at $2 trillion. Getting to the median estimate of $225, starting at the July 6 price of $160, would raise SpaceX’s valuation by $1 trillion to $3 trillion between next July and year-end 2027. That feat already looked mathematically impossible when the banks made their calls. Keep in mind that SpaceX lost $4.9 billion on puny revenues of less than $19 billion in 2025, and its valuation even then stood at a mind-bending 105x its top line.
The recent drop to $123 makes the steepest of hills still steeper. At the analysts’ average projected valuation of $3 trillion by the back half of next year, SpaceX would be twice as valuable as Meta is now, beat Microsoft by 7%, and achieve almost two-thirds the cap of Nvidia. Only 12 U.S. companies are worth $1.0 trillion or more, the likes of J.P. Morgan and Walmart haven’t made the club, and Berkshire Hathaway’s barely gained membership. “For Nvidia or a company earning $100 billion a year today, adding a trillion or more might be plausible,” observes Ritter. “For a mortal like SpaceX, far less so.”
Here’s a reality check. The only way investors boost SpaceX to those heights is if they also believe its stock would “normalize” after the stupendous liftoff over the next year or so, and keep delivering strong returns from there. If SpaceX hits $3 trillion by the end of 2027, and manages what new investors would want as a minimum, decent gains of 10% a year or so, it would be sporting a cap of over $6 trillion by 2034. At the average Mag 7 PE of 31, it would be earning $200 billion annually, far more than the biggest profit-makers, Alphabet and Nvidia, make now. The enterprise currently spending $5 for every $4 it collects in mobile subscriptions and AI sales would need to turn stupendously profitable overnight.
The reason these estimates are so tight and copycat numbers are the order of the day is that it’s extremely difficult to assess SpaceX’s current or future value on its now-underwater fundamentals. “A company going public that’s profitable presents a lot less uncertainty in calculating its true value and where it’s headed,” says Ritter. “With SpaceX, no one knows where it’s going, so the solution is just to add a big percentage number to show you’re bullish. It all looks pretty mechanical.”
In other words, the underwriter analysts are all taking shots in the dark. It’s extraordinary that all the shots hit so close to the same, ultimately unknowable target.
This story was originally featured on Fortune.com
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