SpaceX Faces Key Price Warning as Analyst Flags 45% Downside Risk
Key Points
Some revenue sources appear increasingly uncertain as the company spends heavily on capital expenditures.
SpaceX's current valuation should give investors pause.
Insider selling could also become a concern for SpaceX bulls over the next year.
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Phillip Securities analyst Glenn Thum recently set a target price of $75 per share for Space Exploration Technologies (NASDAQ: SPCX). As of the time of this writing, that would amount to a 45% decline in the stock price. Moreover, Thum has a five-star rating on TipRanks and an 87% success rate, which has won him considerable credibility.
Admittedly, only two out of 35 analysts rate SpaceX as a sell, and certainly, such forecasts do not always come to pass. Nonetheless, it highlights some risks with owning SpaceX stock.
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Here's why investors would probably serve themselves well by heeding this warning.
Image source: The Motley Fool.
The bearish SpaceX call
Thum pointed out a few reasons for his negative outlook on this company. He noted its capital expenditures (capex), which now amount to approximately 2.4 times SpaceX's revenue in the second quarter of 2026. Additionally, Thum expressed some discomfort with 19.5% of Q2 group revenues coming from a single AI customer, widely believed to be Anthropic.
Furthermore, its revenue stream is somewhat uncertain as its cloud service customers can leave its platforms with just 90 days' notice. Additionally, it is probably not surprising that Thum cited the $542 million operating loss in the space segment in Q2 as another negative.
The concerns do not end there. In Q2, revenue grew by 92% year over year. Such increases tend to lead to elevated stock prices, and that certainly is the case with SpaceX.
Still, one has to wonder if that is enough to justify the stock price. As a money-losing company, SpaceX has no P/E ratio. However, its price-to-sales (P/S) ratio recently stood at 86, a level even the most robust growth stocks might struggle to justify.
Also, SpaceX shareholders started facing lock-up expirations in August, and these will continue through next June. Although those are not share dilutions, it offers key insiders the opportunity to sell shares. Since that amounts to billions of shares over the next 10 months, investors should expect selling pressure to hit the tape at each lock-up expiration.
Indeed, none of this directly affects SpaceX as a company. Its dominance in space launches and leadership in satellite internet and AI make it likely the company will prosper in the long term. Nonetheless, with several factors placing pressure on the stock, it is likely wise to take Thum's warnings seriously.
Moving forward with SpaceX stock
Investors should heed the warning from Phillip Securities analyst Glenn Thum and avoid SpaceX stock for now.
To be sure, SpaceX is well positioned to prosper as a company. Its market positioning and the growth of its space, AI, and connectivity segments may undergird the stock once conditions become more favorable for new investors.
However, Thum has outlined headwinds, including high capex and uncertainty around some of its revenue streams. Additionally, its P/S ratio is a possible bubble, making it likely that many insiders will sell shares after their lock-up expirations.
Ultimately, with the risks outlined by Thum, the communication stock is probably too risky to buy at this time.
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Will Healy has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
