Elon Musk has had some pretty exciting, ambitious things to say about the future of Space Exploration Technologies (NASDAQ:SPCX), but perhaps his more recent comments about the company’s value one day eclipsing the value of Earth itself take the cake for the most shocking and bullish thing he’s said about the space titan, which is pretty much in a space race against itself at this point.
Here come the sky-high price targets
With analyst price targets flowing in from across the board, with $800 per-share targets, and a shocking $900 bull target from the likes of Citigroup (NYSE:C | C Price Prediction), questions linger as to whether Elon Musk’s latest words offer anything more than hype. While a valuation north of $11 trillion for SpaceX seems outrageous, I certainly wouldn’t count it out if Elon Musk manages to make orbital data centers and other emerging space-based businesses work.
From space tourism to asteroid mining, it’s pretty easy to dismiss such potential ventures as nothing more than a work of science fiction. Then again, the company is shooting to take the fiction out of science fiction, so I get why so many investors are more than willing to give Elon Musk the benefit of the doubt in these earlier days.
Between the Elon Musk fans who just need to have a piece and growth investors who are feeling a sense of FOMO (Fear of Missing Out), the case for buying in spite of the questionable valuation metrics is quite strong. But even the most exciting company in the world can be a bad bet if one overpays.
If orbital data centers don’t work out in a timeline the market deems as acceptable, it’s hard to tell just where SpaceX shares could find themselves. Can a crash-landing be ruled out? I’m not so sure, but the bull case, in my view, is the reason to make the leap of faith with the name.
Maybe not more than Earth, but a $10-12 trillion valuation can’t be ruled out
Of course, it’s hard to tell how serious Elon Musk was when he brought up the possibility of the company being more than the rest of the Earth combined. The math doesn’t quite add up, even in a bull-case scenario, like the one outlined by Citi. If we’re talking about the next few centuries, though, perhaps anything is possible. But, of course, not all that many investors will probably want to hang onto a stock for that long!
In my view, $10-12 trillion might be the ceiling for the shares. As a part of Citi’s bull case, Starship needs to get going and be at full scale. It’ll also need SpaceX to floor it with Starlink and orbital data centers to achieve an untouchable monopoly (or a near-monopoly).
Add the AI factor into the equation, and the potential for a Moon base with robot workers and a railgun to launch spacecraft from a lunar landing, sure, I suppose SpaceX could have quite a ways to go from here, as the company looks to capture that sky-high total addressable market (TAM) the firm outlined.
The bottom line
While I’ll admit that shares are starting to look more tempting as they make a round trip back to the $135 per-share IPO price, I do think that SpaceX is a super-high-risk/high-reward kind of proposition that’s only fit for true believers of Elon Musk.
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