Analyst to SpaceX Investors: You're Valuing SpaceX Like AI Is Almost Worthless

A funny thing happened when Space Exploration Technologies (NASDAQ: SPCX) reported earnings this month. First, SpaceX declined 13.6% despite beats on both earnings per share and sales for the company. SpaceX lost only $0.09 per share in the quarter, where Wall Street had predicted a $0.29-per-share loss. Sales of $7.8 billion eclipsed forecasts by $1 billion.

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Potentially worse news for investors, the earnings announcement triggered a "lock-up" expiration , permitting SpaceX insiders to sell 20% of their stock. A second lock-up expires later this week, when SpaceX passes the 70-days-after-IPO mark, allowing another 7% of the stock to be sold.

But instead of continuing to fall, SpaceX stock did a U-turn. It recovered all its losses and by Wednesday's close was back above its IPO price and trading for $140 a share.

And one Wall Street analyst thinks this is only the beginning of the rally for SpaceX stock.

SpaceX today carries a market capitalization of $1.9 trillion. It has no profit to back up that valuation, granted, thanks to an artificial intelligence division that's losing more than $1 billion per quarter -- and burning through tens of billions of dollars per year.

But that doesn't scare Morgan Stanley one bit.

In a note released last week, MS analyst Adam Jonas argues that SpaceX's non-AI businesses alone support nearly all of the present value of SpaceX stock, based on a combination of forecast sales and "earnings before interest, taxes, depreciation, and amortization" (EBITDA). To hear Jonas tell it, SpaceX AI comes basically free of charge on top of what investors are already paying for the rest of SpaceX.

Over the past 12 months, the Space and Connectivity divisions of SpaceX -- essentially, everything not AI -- generated a combined $17.9 billion in sales and $8.6 billion in EBITDA, according to data from S&P Global Market Intelligence . AI generated $5.1 billion in sales, but negative EBITDA of $313 million.

Jonas, however, foresees incredible growth for SpaceX over the next couple of years, in Space and Connectivity, and especially in AI.

The analyst calculates that earnings from Space and Connectivity justify the first $127 of SpaceX's current $140 share price -- so 91% of the stock's total market cap. Valuing the stock at 52 times 2028 EBITDA, and reverse-engineering Jonas' math, implies a forecast of $31.5 billion in EBITDA for Space and Connectivity in 2028 -- a 266% increase in just two years.