SpaceX bears are taking a victory lap as the stock struggles a month after the IPO
SpaceX stock has struggled after a brief burst of post-IPO enthusiasm, and the bears are taking a moment to reiterate their downbeat views on the stock.
A month after a historic IPO, SpaceX stock dropped below the initial offering price of $135 on Wednesday, marking a 40% decline from its peak of around $225.
Wall Street analysts rushed to issue bullish price targets when the stock joined the Nasdaq 100 earlier this month, but the bears are feeling emboldened by the plunge that they say bolsters the view that the stock was overvalued from the get-go.
“Expect the price to completely crash,” former Fidelity Overseas Fund manager and hedge fund founder George Noble told Business Insider. “I think it could be half over the course of the year.”
Noble said $30 is a fair price target for SpaceX stock, a forecast that implies a drop of 78% from Wednesday’s price. He’s also previously criticized Tesla, describing Musk’s EV company as the biggest bubble in stock market history.
Jay Ritter, an economist and market commentator dubbed “Mr. IPO” for his expertise and research on companies and capital markets, told Business Insider that he was considering shorting SpaceX prior to its IPO. While Ritter didn’t say whether he is betting against the stock yet, he added that he’s not at all surprised by the post-IPO slide.
CFRA analyst Keith Snyder labeled the stock with a “sell” rating directly following its IPO and hasn’t wavered, even as many of his peers on Wall Street dole out bullish price targets and commentary in their initial coverage.
“I am still negative on the valuation at these levels and haven’t seen anything that would change the story for me,” Snyder told Business Insider last week. The only thing he says would change his mind is actual growth.
Ed Elson, a day trader who co-hosts Scott Galloway’s Prof G Markets podcast, said in June that he saw the stock as highly overvalued, predicting that it would be cut in half within the coming year.
On July 14, Elson shared an updated take on SpaceX, highlighting concerns about the bullish sentiment among Wall Street analysts.
Elson laid out why this may be problematic for investors, especially as many bullish analysts are from banks that underwrote the SpaceX IPO. In his view, they still have financial incentive to describe the stock favorably, even after the end of the quiet period for underwriters.
“Anyone who bought post-IPO is now underwater,” he said. “This is in line with the trend: Research shows IPOs recommended by analysts at underwriting banks underperform and, on average, lose value.”