SpaceX (NASDAQ:SPCX) continued to recover in premarket trading on Wednesday after rebounding from losses that briefly pushed the stock below its post-IPO opening price.
Shares closed Tuesday up 0.9% at $156.06 after falling as low as $147.11 during the session, below the stock’s June 12 opening price of $150. The shares advanced a further 1.2% in premarket trading by 04:43 ET (08:43 GMT).
Although the stock remains well above its IPO price of $135, investors who purchased shares after the public listing have seen much of the early post-IPO gains disappear. SpaceX shares reached a high of $225.64 shortly after the company’s market debut.
Recent Selloff Raises Valuation Questions
The recovery follows a sharp 16.4% decline on Monday after KeyBanc adopted a more cautious view on the stock, arguing that the company’s valuation had become stretched following its rapid post-listing rally.
The weakness came amid a broader technology selloff, with the Nasdaq 100 falling around 2.9% and the S&P 500 declining 1.6% as semiconductor stocks came under pressure and investors reassessed enthusiasm surrounding artificial intelligence-related investments.
Monday’s drop erased approximately $400 billion in market value and intensified debate over whether SpaceX’s long-term growth prospects can support its current valuation.
Baird Sees Potential Tesla-SpaceX Merger
With the IPO now completed, analysts at Baird believe investor attention could increasingly shift toward the possibility of a merger between Tesla (NASDAQ:TSLA) and SpaceX.
The firm said such a transaction appears “as likely to happen sooner rather than later.”
“We see the strategic rationale for a merger as clear and compelling with both companies benefitting from greater scale. Questions may arise regarding regulatory review; however, we do not expect significant scrutiny given limited overlap of end markets,” the analysts wrote.
Baird added that the timing of any potential combination remains uncertain.
“With regard to the timing of a potential merger (which is admittedly much harder to predict), we foresee a period of waiting as SPCX integrates the recent xAI merger and settles in as a public company more broadly,” the analysts said.
Strong Balance Sheet Supports Growth Plans
SpaceX also announced a senior unsecured notes offering on Monday and disclosed that it held approximately $100.8 billion in cash and cash equivalents as of June 19.
The company said proceeds from the debt issuance will be used to repay bridge financing obligations and support general corporate activities.
The sizeable cash position provides additional flexibility as SpaceX continues investing in satellite communications, artificial intelligence and next-generation launch technologies.
Analysts Divided on Valuation
KeyBanc initiated coverage of SpaceX with a Sector Weight rating, arguing that much of the company’s long-term growth opportunity is already reflected in the current share price.
The broker described SpaceX as “the dominant leader in space launch and space-adjacent verticals” but suggested that the stock’s risk-reward profile appears balanced until investors gain greater visibility into the development of Starship.
According to the report, six analysts currently maintain Buy ratings on the stock, while KeyBanc remains neutral and CFRA is the only major brokerage carrying a Sell recommendation.
KeyBanc noted that shares trade at roughly 29 times projected 2027 revenue and 71 times estimated 2027 EV/EBITDA, representing a significant premium compared with peers in the space, artificial intelligence and communications sectors.
Starlink Remains the Core Profit Driver
SpaceX currently operates across three primary business segments: Connectivity, Space and AI.
The Connectivity division, which includes the Starlink satellite internet network, generated approximately 61% of company revenue during 2025 and remains the group’s primary earnings engine.
Starlink produced roughly $11.4 billion in revenue during 2025 while delivering an adjusted EBITDA margin of approximately 63%.
Analysts believe the business provides substantial downside protection for the broader investment case.
“At sufficient scale, Connectivity alone is capable of supporting a meaningful portion of enterprise value, which we believe limits downside to the overall story and allows the remaining segments (AI, Space) to be valued more as incremental upside rather than required for the thesis to hold,” the analysts wrote.
AI Growth Accelerates but Execution Remains Key
The company’s AI segment was created following the February 2026 merger with xAI and includes the Grok chatbot platform as well as related computing infrastructure.
While the division remains loss-making, it has recently secured several large-scale computing agreements, including a contract with Anthropic valued at approximately $1.25 billion per month and another deal with Google worth around $920 million per month.
KeyBanc estimates the AI division could generate approximately $50.6 billion in revenue by 2027, making it SpaceX’s most significant medium-term growth opportunity.
However, the broker noted that Grok currently trails competitors in enterprise adoption, holding just 3.1% U.S. business penetration compared with 41% for Anthropic and 39.5% for OpenAI.
As a result, analysts described the next 12 to 24 months as a critical “prove it phase” for the platform.
Starship Progress Remains Critical
Analysts identified Starship as the most important variable in the long-term investment outlook.
The next-generation rocket is expected to play a central role in deploying future Starlink V3 satellites, lowering launch costs through full reusability and eventually supporting orbital data-centre infrastructure.
Starship Flight 13 is currently scheduled for June 29.
While analysts remain optimistic about the programme’s ultimate success, they cautioned that “we take a conservative approach on its development timeline.”
SpaceX currently has approximately 13 billion shares outstanding, with only about 5% available in the public float. Elon Musk’s 42% ownership stake remains subject to a lock-up agreement until June 2027.