- The SpaceX IPO is expected to happen on June 12 this year.
- Goldman Sachs and Ark Invest believe that the SPCX stock will surge.
- History suggests that the SpaceX stock will crash after the IPO.
Wall Street analysts remain sharply divided on the potential SpaceX IPO. While some believe the stock could soar on strong investor demand and the company’s leadership in the space industry, others warn that lofty valuations and heightened expectations could trigger a sharp post-IPO decline.
In this article, we examine the key reasons investors may want to approach the SPCX stock with caution once it begins trading.
Analysts are Divided on the SpaceX IPO
Some popular analysts are making major announcements about the upcoming SpaceX IPO. In a note today, Goldman Sachs, which is leading the public offering, argued that the company will increase its revenue 100-fold by 2030.
The bank expects that its AI division will make $322 billion in 2030 from $3.2 billion last year. It also expects that the company’s valuation will grow to $474 billion in 2030 from $18.7 billion next year. Such a spectacular growth rate will help to justify the company’s current valuation.
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Cathie Wood, a popular investor who has invested in Elon Musk’s ventures in the past, believes that Starlink itself helps to justify a $2 trillion valuation.
However, not all analysts are highly enthusiastic about the company and its valuation. In a note this week, Morningstar analysts predicted that the company’s real valuation should be 50% below the $1.78 trillion that Elon Musk and the team are targeting.
The report cited the company’s revenue growth and the potential losses. Its recently released S1 showed that the company made over $18 billion in revenue from $14 billion a year earlier. It is also losing billions of dollars a year, a trend that may continue because of its AI business.
Reasons to Avoid the SPCX Stock After IPO
There are a few reasons why the SpaceX stock will likely crash after its June 12 IPO. First, history shows that even the best companies often crash after the initial pop that happens following the IPO. Some of the most recent IPOs that have flopped are companies like Circle (CRCL), Figma (FIG). Medline (MDLN), Klarna (KLAR), and Sailpoint (SAIL).
Circle stock price jumped to $300 after its IPO and has now plunged to $91, erasing billions of dollars in value. Klarna stock plunged from $57 to $17, while Figma fell from $143 to $22.
All these companies were highly popular before their IPOs. For example, Figma is one of the top disruptors in the design industry, while Circle is a major player in the stablecoin industry. Klarna is another top player in the Buy Now, Pay Later (BNPL) industry.
As a result, there are concerns that the SpaceX stock will retreat after the IPO. In the long-term, however, the stock will bounce back as its growth trajectory continues.
The other top reason why the SpaceX stock will retreat after the IPO is the rising competition in the AI industry. There are signs that Grok, its AI platform, is losing an edge against other companies like ChatGPT, Microsoft Copilot, Gemini, and Claude. This is happening despite its strong capital investments, including the construction of the $55 billion chip plant in Texas.
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