SpaceX continues to decline on Monday: buy, sell, or hold?

SpaceX SPCX shares continued their decline on Monday, falling about 1.25% to around $122.

The stock remained well below its $135 initial public offering price.

The latest decline follows a sharp selloff over recent trading sessions.

Shares fell 5.4% on Friday, leaving the company with a market capitalization of about $1.60 trillion, down from approximately $2.64 trillion at the close on June 16, its third day of trading.

The stock initially rallied following the largest IPO in history, but has since given back those gains and is now trading below its IPO price.

Starship launch delayed after engine issue

Investor sentiment was dented after SpaceX called off Thursday's Starship mission when some of the rocket's engines failed to ignite before liftoff.

The company said in a statement on Sunday that it is now targeting Thursday, July 23, for another launch attempt.

Chief Executive Elon Musk initially posted on X that the next Starship launch would take place on Friday before later responding to his own post, writing, "I mean Thursday," bringing his comments in line with the company's earlier statement.

The July 16 launch attempt ended in a last-second abort before liftoff during Starship's 13th flight test from Texas.

The failed launch erased about $100 billion from SpaceX's market value.

SpaceX said it has modified Starship's propulsion system to address the engine issue encountered during the previous launch attempt.

Delays are not uncommon for the company's Starship development program, which has conducted 12 test flights since 2023.

According to SpaceX, the upcoming 13th flight test will carry 20 Starlink satellites to demonstrate the rocket's satellite deployment system and the Starlink network's laser communication links.

The satellites will follow a suborbital trajectory and burn up in Earth's atmosphere after deployment.

Analysts remain broadly positive

Despite the recent decline, Wall Street continues to maintain a generally positive outlook on the company.

According to LSEG data, 27 of the 32 analysts covering SpaceX recommend buying the stock, while four have neutral ratings and one recommends selling.

Supportive analysts argue that the company merits a premium valuation because of its Starlink satellite internet business, government launch operations, and Musk's record of attracting investor interest, despite SpaceX reporting a net loss of nearly $5 billion last year.

Analysts have also identified the upcoming Starship launch as a potential catalyst for the stock as investors assess the company's execution in its launch business alongside its upcoming earnings report and an expanding public float.

SpaceX discussing AI deal with Pentagon

Separately, The Wall Street Journal reported on Friday that SpaceX is in discussions with the US Department of Defense about providing data center capacity worth billions of dollars to run artificial intelligence models.

According to the report, such an agreement would expand the Pentagon's existing relationship with SpaceX, which already works with the department on rocket launches, satellite communications, and missile-tracking services.

The report also said SpaceX employees have discussed plans to compete more directly with cloud infrastructure providers such as CoreWeave by offering computing capacity to AI customers at lower prices.

As per the report, the Defense Department is seeking additional cloud computing capacity to support intelligence agencies and military AI applications.

According to the report, discussions between SpaceX and the Pentagon are ongoing and could still fail to result in an agreement.