SpaceX stock is falling this week as jitters about the artificial intelligence safety continues. SPCX dropped to $143.50 on Tuesday, a few points below this month’s high of $154. This article explains some of the top reasons why the stock has more room for growth in the next five years.
SpaceX stock to benefit from its strong revenue growth
The main catalyst that will drive SpaceX shares in the next five years is its strong revenue growth, which will translate to profits eventually. Its last earnings report showed that its revenue jumped by 92% in the second quarter to $7.2 billion, with the three segments reporting strong growth.
SpaceX has more room for growth in the coming years, especially because of its artificial intelligence (AI) business. Last week, the company announced that it reached a deal with a company that will pay $1 billion a month starting later this year.
The company has inked more deals in the future. For example, it has inked a $1.25 billion a month deal with Anthropic, a $950 million deal with Google, and a $150 million one with Reflection AI.
Analysts now expect that its growth will supercharge in the coming years. Yahoo Finance data estimates that the company will make $44.76 billion this year, much higher than the $18 billion it made last year. It is expected to make $109 billion next year.
These numbers largely confirm what Goldman Sachs and Morgan Stanley predicted about its company. Goldman Sachs believes that the revenue will jump to over $474 billion by 2030, while Morgan Stanley predicts that it will surge to between $3.4 trillion and $3.5 trillion by 2040. Goldman and Morgan Stanley were the lead banks in its IPO.
Analysts are highly bullish on the SPCX stock
Top analysts are highly bullish on the company, which might boost its shares in the long term. William Blair reiterated its outperform rating, while Pivotal Research initiated the company with a buy rating and a price target of $220.
Oppenheimer’s Timothy Horan has an outperform rating and a price target of $280, while Bernstein, Morgan Stanley, Oppenheimer, and Wolfe Research reiterated their outperform ratings.
The average estimate among analysts is that its stock will jump to $221, much higher than the current $143. Eventually, there is a room for the stock to jump to over $500 in the next five years.
Upcoming Starship launch
SpaceX stock will also benefit from the upcoming Starship mega-rocket launch that will happen on September 22. The company plans to deploy the first batch of the third-generation Starlinks into its network. Initially, it plans to launch 26 V3 satellites into orbit in the test flight.
The upcoming launch will be the second one since the company became a publicly-traded company in June. If successful, it will represent the first major milestone for the company as it seeks to retire its Falcon 9 and Falcon Heavy rockets.
Capital expenditure will eventually peak
A key risk for SpaceX is that its capital expenditure continues rising. Its last results showed that its capex jumped to $18.36 billion in the second quarter, much higher than the $10 billion it spent in the second quarter of last year. Most of the capex came from its AI business, which jumped to $15 billion.
The capex growth will likely continue in the coming years as it continues to roll out its data centers and build its Terafabs plant. Fortunately, the company has over $100 billion in cash. This spending phase will eventually be over, making the company highly profitable in the coming years.
Separately, history shows that stocks tend to drop after its IPO and then rebound over time. We saw that with companies like Meta Platforms, Alphabet, and Netflix.