The most important sentence published this week about SpaceX did not come from JPMorgan. It came from Morgan Stanley, which issued a Buy rating with a $300 price target and simultaneously disclosed that SpaceX faces a $672 billion funding gap with no projected free cash flow until 2035. Jim Chanos called that disclosure "truly glorious." He is correct. When your own bull case requires acknowledging a $672 billion capital hole and a decade without positive cash flow, the bull case needs more than a price target. It needs a compelling argument for why the market should fund that gap at current multiples.
SPCX has fallen 35.6% from its all-time high of $225.64. It breached $150 this week, briefly traded below the $135 IPO price on July 15, and is currently trading around $123 to $139 depending on the session. It debuted on June 12, made its high within days, and has been in a steep downtrend for over a month. The stock is now below the level every early IPO buyer paid.
That context matters before you engage with either the bull or bear argument.
What SpaceX Actually Is
The framing of SpaceX as a rocket company is outdated and the framing of it as an AI company is premature. The accurate description is that SpaceX is a satellite internet business with an aerospace infrastructure advantage that has been bundled with xAI, Grok, X, orbital data centre ambitions, and Elon Musk's consolidated technology empire, all of which went public in a single ticker on June 12.
The only profitable business today is Starlink. Starlink has over 5 million subscribers globally. It is expanding into maritime, aviation, and direct-to-cell applications. Revenue is growing. It generates real cash. This is the anchor.
Everything else, orbital data centres launching next year, xAI integration, Grok enterprise AI, the rocket manufacturing business itself, requires significant additional capital and has not yet generated positive cash flow. SpaceX has accumulated $41.3 billion in total losses since its founding in 2002. Musk said the company has been cash flow positive since around 2015 at the IPO roadshow. Morgan Stanley then disclosed that sustaining the growth plan requires $672 billion in additional capital with no positive free cash flow until 2035. These two statements are not obviously compatible, and the market is currently trying to price which one to believe.
SpaceX acquired xAI in February 2026, adding Grok, the Colossus data centre, and the X social platform. Whether that acquisition makes SpaceX more valuable or more complicated depends entirely on whether Grok gains the enterprise traction that the Grok 4.5 launch this week was designed to demonstrate.
The Tesla-SpaceX Merger: JPMorgan's Math
JPMorgan called the merger idea "strategically coherent on paper." Wedbush's Dan Ives put the probability of a deal happening within the next year at over 80%. RBC Capital formally incorporated a 25 to 30% SpaceX acquisition premium into its Tesla price target.
The strategic logic is real. SpaceX and Tesla already have one of the densest financial and operational relationships in corporate history. SpaceX bought $697 million worth of Tesla Megapacks for xAI data centres and $131 million worth of Cybertrucks in 2025. Tesla invested $2 billion in xAI, which subsequently merged with SpaceX. The Terafab chip fabrication facility in Austin is being co-developed by both companies. These are not theoretical synergies. They are existing revenue flows between already-connected entities.
The combined entity would own, if Musk's vision holds, the physical infrastructure of AI from ground to orbit: chip manufacturing, energy generation, compute infrastructure, satellite connectivity, and frontier AI models. SpaceX's own S-1 uses the phrase "physical stack" explicitly to describe this ambition.
The practical obstacles are equally real. JPMorgan noted that securing multi-jurisdictional regulatory approvals, especially in markets where Tesla has significant manufacturing exposure, understates the difficulty. Musk controls roughly 85% of SPCX voting power but only 20% of TSLA voting power. Tesla shareholders would control only about half the economic equity in a combined entity. A combined market cap at current prices is roughly $2.95 trillion on a price-to-sales ratio of approximately 27. Add a 20% Tesla premium and the ratio approaches 30 times sales. That is the valuation hurdle any merger math has to clear before institutional money commits.
Both stocks fell on the merger speculation this week, TSLA down 2.4% to $381.84 and SPCX down 5.5% to $123.89. The market is not treating merger rumours as a positive catalyst at current valuations. That is the most honest market signal available.
Jim Chanos, Michael Burry, and the Bear Case
Chanos and Burry have both raised valuation alarms. Chanos specifically highlighted the Morgan Stanley disclosure of a $672 billion funding gap as evidence that the bull case is internally contradictory: you cannot issue a Buy rating and simultaneously disclose that the company needs more capital than most countries' GDP to execute its plan.
The bear framework rests on four specific claims.
SPCX trades at approximately 110 times revenue. CFRA's lone formal rating is a Sell at $115, implying further downside from current levels. At 110x revenue, the stock needs to grow into a valuation that requires SpaceX to become one of the most valuable companies in history on a business that currently has one profitable division.
China's successful first-ever orbital rocket booster recovery this year narrowed SpaceX's reusable launch advantage. That advantage was the core moat argument for the aerospace business. If China can replicate the booster recovery technology, the barrier to competing on launch costs drops meaningfully over the next five years.
Post-IPO lockup expiration fears are a real near-term pressure. Early investors and employees hold significant positions that become sellable in tranches. That supply overhang has no precedent in SpaceX's private history and creates a structural headwind that Starlink subscriber growth alone cannot offset.
The $672 billion funding gap is not a theoretical risk. Morgan Stanley built it into their own model and still issued a Buy. That implies they believe the capital can be raised, which requires the market to keep assigning the current multiple to a company with no free cash flow for nearly a decade.
Gary Black, $135, and What Matters Next
Gary Black, a prominent TSLA long, warned this week that SPCX could soon trade below its IPO price of $135. It already briefly did on July 15 at $133.80. The IPO price is the most psychologically important level in any post-IPO stock because it represents the price at which the company and its underwriters decided the business was worth buying. Sustained trading below that level signals that the IPO was mispriced relative to current market conditions, which then pressures lock-up holders to sell before the situation worsens.
The next specific catalysts to watch are: Grok 4.5 enterprise adoption numbers, which the company is now actively marketing; first revenue disclosure, expected at the November 2026 earnings; and any official merger announcement or denial from Musk, which would be the single biggest near-term binary for both TSLA and SPCX simultaneously.
Analyst targets span an extraordinary range. Raymond James is at $800. Morgan Stanley is at $300. JPMorgan is at $225. CFRA is at $115 with a Sell. The consensus average sits around $236. A 24x spread between the bull and bear cases on a stock trading at $135 to $150 is not an analytical disagreement. It is a genuine uncertainty about what business SpaceX is actually in and how large that business becomes.
Starship, Orbital Data Centres, and the Bull Case
Starship's reusability creates a cost structure no competitor can currently replicate. Higher flight rates reduce capex while improving reliability, and that feedback loop becomes the essential infrastructure layer for both Starlink's expansion and the feasibility of orbital data centres. Musk said orbital data centres could launch as soon as next year. If that is real and if the compute cost economics work in orbit, SpaceX has a product that does not yet exist anywhere in the world.
Raymond James' $800 target is not hallucinated. It is modelling a scenario where Starlink reaches 50 million subscribers, orbital data centres generate hyperscaler-level revenue, and the xAI integration turns Grok into an enterprise AI platform with real monetisation. In that scenario, $800 is conservative. The question is the probability assigned to that scenario.
Morgan Stanley's $300 target is modelling something more modest. JPMorgan's $225 is more modest still. CFRA's $115 Sell is modelling a scenario where the capital requirements overwhelm the business and the 110x revenue multiple compresses toward something historically normal.
All four of these are coherent positions given what is known today. The honest answer is that SpaceX is early enough in its public market history that the range of outcomes is genuinely that wide.
The Trade Framework
At $135 to $150, SPCX is below its IPO price and 35% below its all-time high. The structural buying mechanics from index inclusion are largely complete. The Nasdaq 100 inclusion happened and the forced buying is behind us. What remains is fundamental buyers deciding whether the business justifies the multiple.
The clearest near-term technical level is the $135 IPO price. If SPCX holds $135 as support through the end of July, the IPO price acts as a floor with a credible buyer base of anyone who participated at the offering. If it breaks $135 convincingly and stays below it, the next support is not obvious because there is no prior trading history below IPO price to anchor to.
For existing holders from IPO: the position is at or slightly below cost depending on entry. The thesis requires patience through the November earnings print, which is the first hard revenue disclosure. Nothing before that changes the fundamental uncertainty materially.
For new entries at current levels: the risk-reward is asymmetric in a way that depends entirely on your time horizon. Below $135 with a 2027 thesis and a partial position is defensible. A full-size position at current prices before the first earnings disclosure is a bet on the merger narrative and Musk execution, not on fundamental value that can be independently verified.
The merger with Tesla is the wildcard that neither bull nor bear can fully price. If Wedbush's 80% probability within a year is accurate, both stocks re-rate simultaneously on announcement. If the deal never happens, SPCX has to justify $135+ on Starlink revenue and Grok enterprise growth alone, which is possible but which currently trades at 110 times revenue.
Know which scenario you are actually underwriting before you size the position.
I am not a financial advisor. Trade wisely, Comrades.
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