SpaceX trades 11% above its $135 IPO price as analysts target $280 — but one investor warns valuation is 'beyond silly'

Elon Musk's SpaceX made its public debut on June 12 amidst a frenzy of excitement, raising $75 billion in what was the biggest IPO in history. While the initial focus of the company was on rockets and space exploration, Wall Street is increasingly intrigued by the potential of artificial intelligence. Technology mogul Jeff Bezos is supporting a platform that allows individuals to invest in rental properties for as little as $100, and financial expert Dave Ramsey warns that nearly 50% of Americans are making a significant mistake with their Social Security.

Meanwhile, SpaceX's shares closed at $147.98 on Friday, slightly above its IPO price of $135. However, the stock has experienced dramatic fluctuations, reaching a valuation of about $3 trillion shortly after its debut before correcting much of those gains. Oppenheimer analyst Timothy Horan remains bullish on SpaceX's future, raising his price target to $280, largely driven by the company's capacity to harness computing power to enhance its AI models.

SpaceX itself projects annual revenue growth from $31 billion in Q2 to potentially $100 billion by December, with cloud services expected to be the primary driver of this increase. Analysts from Deutsche believe the $100 billion target is likely achievable, attributing a substantial portion of this total to neocloud services ($48 billion), Starlink ($13.2 billion), Cursor ($12 billion), and Starshield ($11 billion).

The rocket segment of SpaceX's revenue may become a smaller fraction over time, which could make investors wonder about the remaining upside in a company already valued at $2 trillion. Morgan Creek Capital's Mark Yusko has dubbed SpaceX's valuation "beyond silly," arguing that much of the company's future growth is already priced into its stock.

For instance, SpaceX would need to grow into a $20 trillion company for a 10x return, which Yusko considers a mathematical impossibility. As more lockup restrictions on early shares expire, early investors may take profits, potentially putting downward pressure on the stock.