Analyst: SpaceX Stock Valuation Unsustainable, Fair Price $30
Analyst George Noble warns that SpaceX's current stock valuation is unsustainable and driven by post-IPO speculation. He argues the fair value for the stock should be $30 per share.
George Noble, an analyst and founder of the former Fidelity Overseas Fund, has reiterated his bearish stance on SpaceX. In a recent post on X, formerly Twitter, Noble warned that retail investors who bought into the company at its recent valuation risk significant losses.
Noble criticized the IPO process, suggesting it was designed to attract retail investors despite the company's valuation being significantly detached from its fundamentals. He cited data indicating SpaceX went public with a price-to-sales (P/S) ratio exceeding 90, which briefly surged to 140 times earnings after the IPO.
According to Noble, such a high valuation is not supported by the company's actual business performance. He attributed the rapid stock increase post-IPO to a short squeeze, exacerbated by the limited availability of tradable shares – less than 5% of the total share count. The forced buying by passive funds and ETFs, due to SpaceX's inclusion in indexes like the Nasdaq 100, further inflated demand.
"On the one hand, you have extremely limited supply, and on the other hand, you have forced buying, which is the definition of a short squeeze," Noble stated. He also pointed to the impending release of shares held by insiders and early investors following the company's second-quarter earnings report. This event could substantially increase the stock's float, shifting market influence away from fundamentals towards supply dynamics.
Noble has placed SpaceX on his list of stocks to short, estimating its fair value at a mere $30 per share. He expressed concern that many investors may not have thoroughly reviewed the company's filings, potentially overlooking critical risk factors.