Key facts
- SpaceX stock fell 11% pre-market following its second-quarter earnings report.
- The company reported $7.8 billion in revenue, exceeding expectations.
- SpaceX posted a net loss of $541 million for the quarter.
- Capital expenditures surged by over 500% to $18.4 billion, largely due to AI investments.
- Despite the stock drop, most Wall Street analysts maintain bullish ratings and price targets, with several indicating over 100% upside potential.
SpaceX shares experienced a significant decline, falling as much as 13% in pre-market trading on Wednesday, despite the company exceeding earnings expectations. The stock has now plunged 43% from its recent peak and is down 24% from its IPO price of $135 per share.
The primary driver for the stock's drop appears to be the company's substantial investment in artificial intelligence, with capital expenditures soaring by over 500% to $18.4 billion for the quarter. This elevated AI spending has become a scrutinized metric across the tech sector, with companies like Tesla, Alphabet, and Meta also facing investor concerns over their large AI investment plans.
Despite the financial concerns, SpaceX's second-quarter results also showed positive signs. The company reported $7.8 billion in revenue, surpassing expectations. However, it also recorded a net loss of $541 million, adding to the $4.9 billion loss from the previous year.
Retail investors, however, appear to be viewing the post-earnings dip as a buying opportunity. Data from Vanda Research indicates that retail investors purchased $22.7 million of SpaceX shares in the first hour of trading, three times the average amount seen on other trading days. This suggests a more opportunistic approach from retail buyers following the earnings sell-off.
Wall Street analysts largely remain optimistic about SpaceX's long-term prospects. Morgan Stanley reiterated an Overweight rating with a price target of $300, citing a modestly positive outlook and raising revenue forecasts. Oppenheimer maintained an Outperform rating with a $250 price target, expecting faster monetization and AI buildout despite elevated capex. Cantor also reiterated an Overweight rating at $246, anticipating near-term pressure but long-term upside. Bernstein maintained an Outperform rating at $239, suggesting that earnings should not be the primary focus at this stage and noting that the timing of insider share lockup expirations might have contributed to the decline.
Bank of America reiterated a Buy rating with a $235 price target, expecting soaring AI growth and constructive reporting. Deutsche Bank also maintained a Buy rating at $235, acknowledging that capex could accelerate into 2027 but remaining steadfast in its long-term bull thesis. Piper Sandler, however, reiterated a Neutral rating with a $140 price target, citing potential headwinds from a significant increase in tradable shares due to lockup expirations and higher capex guidance for 2027.