SpaceX stocks fell 8% in premarket trading on Tuesday as Morningstar questioned whether the company's exclusive Nvidia deal signals a retreat from Tesla-linked chip manufacturing plans, even as CEO Elon Musk appeared to endorse a $10 trillion bull case and warned crowded short sellers. Morningstar maintained its one-star rating and $62 fair-value estimate for SpaceX, implying a 51% downside from current levels, citing concerns that investors are pricing in overly optimistic outcomes for reusable Starship rockets and orbital data centers. The stock movement comes as SpaceX's second-quarter revenue jumped 92% to $7.8 billion, led by a 7x increase in AI-computing rentals, while short interest climbed to 206 million shares worth $23.6 billion ahead of Thursday's first lockup expiration.
SPCX stock jumped 9% to $125.33 on Tuesday before falling 7.5% in extended trading.
Morningstar Maintains One-Star Rating as Nvidia Deal Raises Terafab Questions
Morningstar maintained its one-star rating, "Very High" uncertainty assessment and $62 fair-value estimate for SpaceX, implying a 51% downside from current levels. SpaceX's second-quarter revenue jumped 92% to $7.8 billion, led by a 7x increase in AI-computing rentals. Starlink revenue grew 67% and launch revenue rose 29%. Morningstar said the stock was "significantly overvalued," arguing that investors are pricing in overly optimistic outcomes for reusable Starship rockets and orbital data centers. It also said SpaceX's massive AI investments currently outweighed its neocloud rental income.
The research firm separately questioned SpaceX's decision to exclusively use Nvidia's Vera Rubin architecture for future terrestrial data centers and its planned Starmind orbital-computing satellites. "We're exclusive to Nvidia," Musk said during the earnings call, calling it "the best AI computer." Morningstar said the agreement could represent a retreat from plans to manufacture chips with Tesla through Terafab. Public documents released in May estimated that Terafab's first phase would cost at least $55 billion, with a full buildout potentially reaching $119 billion. Intel joined the project in April, while Musk previously said SpaceX would lead its initial scaled-up phase.
Musk Endorses $10 Trillion Bull Case and Projects $100 Billion Revenue by December
Early SpaceX investor Peter Diamandis said on X that the market was undervaluing five interconnected businesses spanning communications, AI computing, chipmaking, launch and infrastructure. "SpaceX is the only company on the planet that owns the rocket, the satellites, the ground network, and now the AI compute layer," he said. Diamandis predicted SpaceX could become the world's first $10 trillion company. Musk responded with two rocket emojis, appearing to endorse the thesis.
Deepwater Asset Management's Gene Munster offered a similarly bullish view. "They're the world's only sovereign AI company and early in building what I believe will be the world's most valuable company," Munster said. Clear Street also said SpaceX's AI unit turned adjusted EBITDA-positive a year earlier than expected and added that investors underestimate the computing capacity already funded ahead of contracted demand.
Musk said SpaceX should exceed $100 billion in annualized revenue by December even if it "basically did nothing" beyond existing plans. He also moved its internal target for reaching $1 trillion in annual revenue from 2031 to 2030, with a "non-zero chance" of reaching it in 2029. Meanwhile, former Tesla director Steve Westly said that SpaceX could compete with Anthropic, OpenAI and Google. "This is not going to be easy," Westly said. "I think it's a lot easier to beat GM and Ford in the electric-car sector than it is to tackle Anthropic, OpenAI and Google."
Short Interest Reaches $23.6 Billion Ahead of Thursday Lockup Expiration
S3 data showed SpaceX short interest climbing from 23.3 million shares on June 16 to 219.3 million by July 29, equivalent to 34% of its publicly tradable float. More recent estimates put the position at 206 million shares, or 32.2% of float, worth $23.6 billion, above Tesla's short book. About 95% of available shares were reportedly out on loan.
"I try to warn them, but they just double down," Musk said on X in response to the crowded trade. Short sellers now face Thursday's first lockup expiration, which could make up to 911 million additional shares eligible for sale. Further unlocks are scheduled for Dec. 8 and June 14, 2027.
Retail Sentiment Turns Bullish on Stocktwits
On Stocktwits, retail sentiment for SPCX improved to 'bullish' from 'neutral' levels a day ago amid a 264% surge in 24-hour message volumes. One user said, "$TSLA Remember when Elon tweeted he would take Tesla private for $420. I feel strongly $SPCX will merge with Tesla next year at that price." Another user said, "$SPCX the problem with Spacex going down this week because of the unlock is it will bring down the rest of the stock market with it."
SPCX stock has declined 22% so far this year.
FAQ
What caused SpaceX stocks to fall 8% in premarket trading on Tuesday?
SpaceX stocks fell 8% in premarket trading on Tuesday after Morningstar questioned whether the company's exclusive Nvidia deal signals a retreat from Tesla-linked chip manufacturing plans through Terafab. Morningstar maintained its one-star rating and $62 fair-value estimate, implying a 51% downside from current levels, citing concerns that investors are pricing in overly optimistic outcomes for reusable Starship rockets and orbital data centers.
What revenue projections did Elon Musk announce for SpaceX?
Musk said SpaceX should exceed $100 billion in annualized revenue by December even if it "basically did nothing" beyond existing plans. He also moved its internal target for reaching $1 trillion in annual revenue from 2031 to 2030, with a "non-zero chance" of reaching it in 2029. SpaceX's second-quarter revenue jumped 92% to $7.8 billion, led by a 7x increase in AI-computing rentals.
How much short interest does SpaceX currently face?
S3 data showed SpaceX short interest at 206 million shares, or 32.2% of float, worth $23.6 billion, above Tesla's short book. About 95% of available shares were reportedly out on loan. Short sellers now face Thursday's first lockup expiration, which could make up to 911 million additional shares eligible for sale, with further unlocks scheduled for Dec. 8 and June 14, 2027.
