SpaceX stock is soaring: is this a golden opportunity to buy?

SpaceX stock has rebounded substantially in the past few days as investors cheered the recent earnings and the employee lockup expiry. SPCX jumped to $138.63 on Monday, its highest level since July 14, and 31% above the lowest level this year. 

This article explores the top reasons why this may be a golden opportunity to buy the stock despite the recent analyst downgrades. For example, Susquehanna, Royal Bank of Canada, and Raymond James downgraded their ratings to underperform, hold, and strong sell, respectively. Citigroup also lowered the rating from buy to sell.

SpaceX revenue growth is accelerating

One main reason why SpaceX’s stock has more upside to go in the long term is that its revenue growth is accelerating. Its recent results showed that its revenue jumped by 92% to $7.2% in the second quarter. This growth was partly because of its merger with xAI, which owns X and Grok. 

Looking at its business, its space segment jumped to $962 million from $619 million in the same period last year. Its connectivity revenue rose from $3.2 billion to $4.29 billion, while its AI segment made over $2.56 billion. 

Most importantly, analysts are optimistic that its business has more room for growth in the coming years. Yahoo Finance data shows that the average estimate is that its revenue will hit to $44.2 billion this year, followed by $90.2 billion in the following year. 

In a recent note, Goldman Sachs analysts predicted that its revenue will jump to $474 billion in 2030. While this forecast should be taken with a grain of salt because Goldman Sachs participated in its IPO, the real figure will likely be close. 

Goldman cited its AI segment, which has already inked some major deals. It has inked three deals that will hand it $2.35 billion a month. In this, Anthropic is paying it $1.25 billion a month, while Google and Reflection AI are paying it $925 million and $150 million a month, respectively.

Spending concerns are being overstated

One reason why SpaceX stock has come under pressure is that the management is boosting its spending. In its last report, the management said that its capital expenditure jumped to $18.3 billion, a big increase from the $10 billion it spent in the same period last year.

Its AI spending jumped to $15.8 billion in the last quarter as the company intensified its data center spending. This spending will continue as the company continues its Terafab construction in Texas. 

The soaring spending means that the company will struggle to generate positive free cash flow in the near future. However, as we saw with Tesla years ago, short-term pain can translate to substantial long-term gains over time.

Technicals suggest SpaceX stock has more gains to go

SPCX stock chart | Source: TradingView

The hourly chart shows that the SPCX stock has rebounded in the past few days. This rebound happened after it formed a double-bottom pattern at $104.8 and a neckline at $126. 

The stock has moved slightly above the 50-period moving average, while the Relative Strength Index (RSI) has moved close to the overbought level. 

While this rebound may be a dead-cat bounce, in the future, there is a likelihood that the stock will continue rising in the long term. Such a move may push it to a record high of $225 in the long term.

Still, the bullish thesis has some risks, including the potential merger with Tesla and the fact that its valuation is quite stretched today.

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