Could SpaceX stock fall to $100? Morgan Stanley says it means a zero AI valuation

SpaceX is set to report its first quarterly earnings as a publicly listed company on August 4, but investors are increasingly focused on another event that could have an even bigger impact on its share price.

Two business days after the earnings release, the company's first lock-up period will expire, allowing pre-IPO investors to sell nearly one billion shares—significantly more than the number sold during SpaceX's record-breaking public offering in June.

The stock has endured a volatile start since its $86 billion (approx. £65.1 billion) listing.

After climbing almost 50% during its first three trading sessions, shares have steadily retreated, falling as low as $110.85 last week, or about 18% below the IPO price, before closing Friday at $115.07.

Lock-up expiry could increase selling pressure

Lock-up periods prevent company insiders and early investors from selling their holdings immediately after a stock market listing.

Once the restrictions expire, a substantial increase in available shares can weigh on prices if investors decide to cash out.

Nearly 629 million shares were sold during SpaceX's June 12 IPO, but almost one billion additional shares will become eligible for sale after the first lock-up expires in early August.

Over the next year, more than 6.4 billion shares could ultimately enter the market.

While there is no certainty that all eligible investors will sell, market participants expect at least some increase in supply that could place further pressure on the stock.

Morgan Stanley says investors ascribing zero value to AI if stock slips to $100

Morgan Stanley analyst Adam Jonas noted that some investors expect the shares to fall further, potentially reaching $100 after the lock-up expires.

At that level, he argues, the market would effectively be assigning little or no value to SpaceX's AI business.

"Most investors we speak with significantly discount Grok & Cursor," Jonas wrote.

"Many ascribe zero or even negative value for AI given the high capex requirements relative to Space & Connectivity, largely uncertain economics, and the high degree of management time devoted to the business."

Jonas has a $300 price target on SpaceX, with more than half of that valuation attributed to the company's AI operations.

Jonas believes the recent weakness has created an attractive entry point.

"We believe the current disconnect between increasingly bearish investor sentiment and largely unchanged fundamentals creates an attractive entry point in SpaceX shares," he added.

What is SpaceX's AI segment about?

SpaceX's AI division operates two Colossus data centres, which together constitute the world's largest AI training cluster.

Leveraging its reusable rocket technology, satellite network and artificial intelligence capabilities, the company plans to eventually offer AI cloud computing services from space-based data centres.

It argues that abundant solar energy in orbit and naturally colder temperatures could help overcome the power consumption and cooling constraints faced by conventional terrestrial facilities.

In its SEC filing ahead of the IPO, SpaceX said it believes it is uniquely positioned to commercialise orbital AI computing at scale.

"We believe we are the only company with a commercially viable path to building orbital AI compute at scale," the company said in its Form S-1. SpaceX estimates its total addressable market at $28.5 trillion (approx. £21.6 trillion), with AI products and services accounting for $26.5 trillion (approx. £20.1 trillion) of that opportunity.

Wall Street remains bullish on SPCX

SpaceX's decline comes amid broader investor caution toward companies investing heavily in artificial intelligence.

Technology firms have committed hundreds of billions of dollars to AI infrastructure in recent quarters, prompting concerns about rising capital expenditure and delayed returns on investment.

Those worries have been amplified by a fragile macroeconomic backdrop and heightened geopolitical tensions between the United States and Iran, which have lifted oil prices and dampened appetite for risk assets.

Despite those concerns, Wall Street remains overwhelmingly positive on SpaceX's longer-term prospects.

According to Bloomberg data, nearly 80% of analysts covering the company recommend buying the shares.

The average price target stands at around $232, implying the stock could more than double from current levels.

Goldman Sachs, Bank of America, Citigroup and JPMorgan Chase—all of which worked alongside Morgan Stanley on SpaceX's IPO—have maintained buy-equivalent ratings on the company.

Among the 33 analysts tracked by Bloomberg, Jonas remains one of the most optimistic, with his $300 target ranking as the third highest on Wall Street.