SpaceX Stock Faces Potential 30% Decline by 2028, Analyst Warns
Space Exploration Technologies (NASDAQ: SPCX), the company behind groundbreaking advancements in space exploration and rocketry, recently completed its Initial Public Offering (IPO), a landmark event that saw its stock initially surge. However, in the weeks following its debut, SpaceX shares have experienced a notable downturn, retreating to their IPO price of approximately $135. Market analysts suggest that this decline, and a potential further drop of up to 30% by 2028, is driven by several fundamental factors that are now tempering early investor enthusiasm.
The initial surge in SpaceX’s stock was largely fueled by the widespread excitement surrounding its ambitious projects and its dominant position in the burgeoning space industry. This phenomenon, often termed FOMO (Fear of Missing Out), typically drives up the valuations of highly anticipated IPOs. Investors eager to gain early exposure to a company with immense long-term potential tend to bid up the stock price, often pushing it beyond its intrinsic value. However, as the initial fervor subsides, the market typically recalibrates, focusing more on the company’s underlying financial performance and future prospects. For SpaceX, this transition may already be underway, with fading enthusiasm contributing to its current stock price levels.
1. Diminishing IPO Enthusiasm
The market’s initial reaction to SpaceX’s IPO, while strong, has shown signs of cooling. As the period following the IPO progresses, investors are increasingly shifting their focus from speculative excitement to a more critical evaluation of SpaceX’s financial fundamentals. The stock’s retreat to its IPO price of $135 is a signal that the initial wave of FOMO may be subsiding. Analysts predict that as more investors conduct due diligence, the stock could experience further declines, potentially reaching levels 30% below its peak valuation, as the market more accurately prices in the company’s financial realities and future growth trajectory.
2. The Long Road to AI Profitability
SpaceX has identified Artificial Intelligence (AI) as its most significant future growth opportunity, estimating a colossal total addressable market of $28.5 trillion, with a substantial $26.5 trillion attributed to its AI ventures. This AI-focused outlook is a key driver behind SpaceX’s impressive $1.8 trillion valuation, especially considering its current lack of consistent profitability – a trait that distinguishes it from many other high-valuation tech companies. SpaceX’s AI segment is currently in a heavy investment phase, generating significant operating losses despite substantial revenue.
In 2025, the company’s AI division reported $3.2 billion in revenue but a staggering $6.4 billion operating loss. This strategic decision to reinvest heavily in AI expansion means that profitability from this segment is not expected in the near term. Historically, the market has reacted negatively to companies that heavily invest in AI without demonstrating a clear return on investment. Should SpaceX continue this trend, its stock price could face considerable downward pressure as investors become wary of the prolonged period before the AI investments yield positive earnings.
3. Intensifying Competition in Space Exploration
While SpaceX has established itself as a leader in the space industry, pioneering reusable rocket technology and driving down the costs of space access, its technological advantage is not unassailable. Recent successes by international competitors, such as Japan and China in developing reusable rocket technology, highlight the global nature of this sector. Although these competitors may not directly vie for U.S. government contracts, their advancements indicate a shrinking gap in technological prowess. As SpaceX’s competitive edge potentially narrows, the market may adjust its valuation downwards, reflecting a more moderated outlook for the company’s future growth and market dominance.
SpaceX’s Intrinsic Value and Stock Outlook
SpaceX’s business model is robust, bolstered by its technological expertise and vertical integration strategy, which allows for economies of scale. However, at its current $1.8 trillion market capitalization, the stock appears significantly overvalued. Analysts suggest that a potential 30% correction, bringing its market cap down to approximately $1.26 trillion within the next 18 months, could represent a more realistic valuation. This adjustment would be more reflective of the company’s current financial standing and the time required for its ambitious initiatives, particularly in AI, to mature and become profitable.
Is SpaceX Stock a Buy Now?
Given the current market sentiment and the factors discussed, investors might consider waiting for a more opportune entry point. While SpaceX’s long-term potential remains significant, the current valuation suggests a cautious approach. The Motley Fool’s Stock Advisor service, known for its successful track record in identifying high-growth potential stocks, has not recommended SpaceX at this time, instead highlighting other companies built for sustained long-term growth. It is advisable for investors to conduct thorough research and consider their risk tolerance before investing in high-growth, pre-profitability companies like SpaceX.
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