Down 50% From Its Peak, Can SpaceX's First Earnings Stop the Selling? Morgan Stanley Warns "Max Q" Is Still Ahead
SpaceX SPCX | 0.00 | |
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Intuitive Machines LUNR | 0.00 | |
AST SPACEMOBILE INC ASTS | 0.00 | |
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SpaceX is set to release its first quarterly earnings report as a public company on August 4, a milestone that will likely shape market sentiment toward one of the year's most closely watched IPOs. However, according to a recent Morgan Stanley research report, investors may be focusing on the wrong catalyst.
Rather than the quarterly numbers themselves, Morgan Stanley argues that the combination of an unprecedented share lock-up expiration, management's long-term commentary, and the company's AI roadmap could prove far more important in determining the stock's near- and medium-term direction.
Key Dates to Watch
| Date | Event | Why It Matters |
|---|---|---|
| August 4 | 2Q26 earnings release | First earnings report since IPO; management commentary likely more important than quarterly figures |
| August 6 | Lock-up expiration | Approximately 911 million shares become eligible for trading, representing roughly $100 billion of potential supply |
| Late August / Early September | Starship Flight 14 | Potential catalyst if the upper-stage recovery demonstrates meaningful progress toward full reusability |
Morgan Stanley: "Max Q" May Be the Most Challenging Phase
Morgan Stanley compares SpaceX(SPCX.US)'s current situation to "Max Q"—the point during a rocket launch when aerodynamic pressure reaches its peak.
The analogy reflects what the firm believes is the company's most significant near-term challenge: not weakening fundamentals, but a combination of technical selling pressure, cautious investor positioning, and macro uncertainty.
Since its June IPO at $135 per share, SpaceX briefly surged above $225, pushing its market capitalization close to $3 trillion. The stock has since retreated to around $110–115, roughly 50% below its peak.
The investment bank believes the upcoming earnings release is unlikely to materially change the long-term investment narrative. Instead, market attention may shift quickly toward the lock-up expiration, when a substantial amount of stock held by early investors becomes eligible for sale.
Earnings Expectations
Morgan Stanley's estimates remain slightly below broader market consensus.
| Metric | Morgan Stanley Estimate |
|---|---|
| Revenue | $6.75 billion |
| Adjusted EPS | -$0.35 |
| Consumer Starlink Subscribers | 12 million |
| Monthly ARPU | $65.5 |
| Year-end AI Computing Capacity | 2 GW (target) |
| FY2026 Capital Expenditure | Approximately $48 billion |
The firm expects management to provide limited quantitative guidance, similar to Tesla's communication style. Instead, executives are more likely to discuss strategic priorities, including Starship development, AI infrastructure expansion, and long-term deployment plans.
What Investors May Focus On
Morgan Stanley highlights several areas that could receive greater attention than the quarterly financial results themselves.
1. Enterprise AI Strategy
The bank believes the market continues to underestimate SpaceX's enterprise AI opportunity.
Rather than focusing solely on Grok or consumer-facing AI products, investors may look for updates regarding:
- Enterprise AI infrastructure deployment
- AI cloud ("NeoCloud") expansion
- Cursor integration following its acquisition
- Partnerships supporting large-scale AI model training
- Progress toward multi-gigawatt computing capacity
According to Morgan Stanley, these initiatives could become increasingly important drivers of long-term valuation if commercialization progresses as expected.
2. Starlink Commercial Momentum
Beyond subscriber growth, management commentary surrounding enterprise customers may receive particular attention.
Areas worth monitoring include:
- Large enterprise contracts
- Government and commercial connectivity projects
- ARPU trends
- Capacity expansion through future satellite launches
3. Starship Development
Although Starship contributes relatively little to near-term revenue, Morgan Stanley views continued progress as strategically important.
The firm's report points to the planned Starship Flight 14, expected in late August or early September, as a potential operational milestone. A successful recovery of the upper stage would represent another step toward full reusability, potentially improving the long-term economics of the launch business.
Valuation: AI Represents the Largest Component
Morgan Stanley maintains an Overweight rating with a $300 price target.
Its sum-of-the-parts valuation is shown below.
| Business Segment | Valuation Contribution |
|---|---|
| Space Business | $8/share |
| Connectivity (Starlink) | $128/share |
| X & Grok | $12/share |
| Enterprise AI | $152/share |
| Total Target Price | $300/share |
Notably, more than half of Morgan Stanley's valuation is attributed to the company's enterprise AI business.
The report argues that current market pricing implies little or no value for this segment, suggesting investors remain focused primarily on launch operations and satellite broadband while assigning limited credit to future AI monetization.
Short-Term Risks Remain Elevated
Despite its constructive long-term outlook, Morgan Stanley acknowledges that several factors could continue to pressure the stock over the coming months.
| Potential Headwinds | Potential Positive Catalysts |
|---|---|
| Large lock-up expiration | Successful Starship Flight 14 |
| Higher-than-expected capital expenditure | Faster AI infrastructure deployment |
| Additional financing requirements | Enterprise AI customer wins |
| Slower Starlink subscriber growth | Expansion of AI cloud services |
| Delays in AI commercialization | Stronger enterprise connectivity demand |
Investor sentiment also appears cautious. According to Morgan Stanley's recent discussions with institutional investors, more than two-thirds expect the stock to remain under pressure through year-end, while opinions become considerably more constructive over a 12- to 18-month investment horizon.
Related Stocks to Watch
| Ticker | Category | Why It Matters |
|---|---|---|
| SpaceX(SPCX.US) | Commercial Space / AI Infrastructure | Earnings, Starlink expansion, AI infrastructure and Starship progress remain the primary catalysts. |
| Rocket Lab(RKLB.US) | Commercial Launch | One of the leading small-launch providers and a key competitor in the commercial launch market. |
| Intuitive Machines(LUNR.US) | Lunar Exploration | Benefits from NASA's lunar commercialization and deep-space exploration spending. |
| AST SPACEMOBILE INC(ASTS.US) | Satellite Communications | Developing direct-to-cell satellite connectivity, representing an alternative satellite communications model. |
| Globalstar, Inc.(GSAT.US) | Satellite Communications | Satellite network operator with growing enterprise and government applications. |
| Iridium Communications Inc.(IRDM.US) | Satellite Communications | Global L-band satellite network serving aviation, maritime, defense and IoT customers. |
| Planet Labs PBC(PL.US) | Earth Observation | Operates one of the world's largest Earth-imaging satellite constellations. |
| Amazon.com, Inc.(AMZN.US) | Satellite Broadband / Cloud AI | Project Kuiper competes with Starlink, while AWS remains a major AI infrastructure provider. |
| Alphabet Inc. Class A(GOOGL.US) | Cloud AI Infrastructure | Google Cloud is expanding AI infrastructure and satellite connectivity partnerships. |
| Microsoft Corporation(MSFT.US) | AI Infrastructure | Azure is among the largest AI cloud platforms and a key benchmark for hyperscale AI investment. |
| NVIDIA Corporation(NVDA.US) | AI Computing | Dominates AI accelerator chips powering hyperscale AI data centers. |
| Advanced Micro Devices, Inc.(AMD.US) | AI Computing | Expanding its AI GPU portfolio and competing for hyperscale AI deployments. |
| Super Micro Computer, Inc.(SMCI.US) | AI Servers | Provides AI server systems benefiting from accelerating data-center investment. |
| VERTIV HOLDINGS LLC(VRT.US) | Data Center Infrastructure | Supplies cooling and power solutions essential for high-density AI computing. |
| CoreWeave(CRWV.US) | AI Cloud Infrastructure | One of the fastest-growing GPU cloud providers and an important benchmark for AI infrastructure demand. |
Why these names? Morgan Stanley's investment thesis extends beyond launch services. The report emphasizes that SpaceX's long-term valuation increasingly depends on AI infrastructure, enterprise AI services, satellite connectivity, and Starship's reusability, making the companies above useful benchmarks when evaluating sector trends alongside SpaceX's earnings.
Key Takeaways
Morgan Stanley(MS.US) views SpaceX's upcoming earnings release as an important event, but not necessarily because of the quarterly financial results. Instead, the firm believes the combination of management commentary, AI strategy updates, Starship development, and the imminent lock-up expiration will likely shape market expectations more than reported earnings.
While the report acknowledges that technical factors—including the release of approximately $100 billion worth of previously restricted shares—could contribute to heightened volatility in the near term, Morgan Stanley continues to view SpaceX's long-term value proposition through the combined lenses of space infrastructure, satellite connectivity, and enterprise AI.
As a result, the firm's analysis suggests that investors may increasingly focus on whether SpaceX can demonstrate continued execution across these strategic initiatives, rather than on a single quarter's financial performance.
Disclaimer: This article summarizes publicly available research from Morgan Stanley for informational purposes only and should not be construed as investment advice or a recommendation to buy or sell any security.