After 30 "Buy" Ratings, SpaceX Stock Price Plummets 12%
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After 30 "Buy" Ratings, SpaceX Stock Price Plummets 12%
When Morgan Stanley sets a $300 target price while simultaneously saying "bear case $75, bull case $600," they actually said nothing.
Navigating Web3 tides with focused insightsAuthors: Scott Galloway & Ed Elson
Compiled by: TechFlow
TechFlow Editor's Note: SpaceX just joined the Nasdaq 100 and received 31 "Buy" ratings out of 32 analysts, but the stock price fell 12% instead. This is no coincidence—Wall Street analysts' optimistic bias has a long history, especially among investment banks that underwrote the company's IPO. When Morgan Stanley gives a $300 target price (twice the current price), while saying "Bear case $75, Bull case $600", they are actually saying nothing. More ironically, the SEC abolished regulations preventing analyst corruption just seven months ago.
A significant proportion of Gen Z (and 10% of Americans) are maintaining long-term friendships with AI chatbots.
- SpaceX joins Nasdaq 100 and receives near-unanimous "Buy" ratings—but stock price still falls 12%
- Cryptocurrency has lost half its value since last October, along with most of its "cool" factor
- First-time homebuyer proportion hits historic low, while housing prices hit historic highs
Who Decides SpaceX's Valuation?
SpaceX officially joined the Nasdaq 100 last week. It qualified through new fast-listing rules, which shortened the required trading history from at least three months to just 15 days, and removed the minimum public shareholding requirement. Before the rule change, Nasdaq 100 stocks had to have a minimum float of at least 10%.
The stock also received a surge of new ratings from Wall Street analysts. Among the 32 analysts covering SpaceX, only one issued a "Sell" rating—it came from CFRA Research, an independent financial intelligence firm with no investment banking, asset management, or trading divisions.
Financial analysts typically set target prices estimating a stock's future value and write reports explaining their reasoning to clients. SpaceX's target prices are obviously optimistic.
Brian Gesuale of Raymond James predicts SpaceX will reach $800 per share within the next 12 to 18 months. To achieve this target, SpaceX's stock price must rise more than 400%, and its market cap will reach $10.5 trillion, equivalent to one-third of US GDP. This would make SpaceX worth more than the combined stock markets of the UK, France, and Germany.
Research finds evidence that analysts bias stock recommendations upward, especially if the bank they work for has connections to the stock they analyze. This was particularly rampant during the Internet bubble. A typical example: Just two months before Enron collapsed, 16 out of 17 sell-side analysts covering the stock rated it "Buy" or "Strong Buy". Many of them came from banks that had business dealings with Enron.
Investor protection measures were implemented after the bubble burst, and it is now illegal for investment banking divisions to influence bank analysts. However, research shows that even after these reforms, affiliated analysts (i.e., analysts covering companies that have business dealings with their investment banking divisions) are still reluctant to issue pessimistic recommendations.
The optimistic bias among the analyst community is deeply rooted. Even controlling for accuracy, more optimistic analysts are more likely to be promoted to top brokerages, and more optimistic analysts are more likely to be called on during company earnings conference calls.
Nowadays, among all 84 holdings in the Global X Artificial Intelligence & Technology ETF, only 2% of stocks have a net "Sell" recommendation.
Analysts from banks underwriting SpaceX's listing are overall more optimistic than the non-affiliated analyst group. 100% of affiliated analysts issued "Buy" recommendations. Among the 17 analysts who did not underwrite SpaceX's listing, only 65% did so.
Despite the optimistic ratings, SpaceX's stock price fell 12% last week, down 36% from its peak.
Morgan Stanley's target price is $300—twice the current stock price. They also wrote that their bull case is $600, and bear case is $75. They are telling us: it could fall 50%, but it could also rise 300%. So they basically said nothing.
What we learned from the Internet bubble is that structural conflicts of interest are embedded in equity research. If you give a company a "Sell" rating, then that company is unlikely to be interested in cooperating with you to underwrite their IPO, from which you could have earned a 1% underwriting fee. So, Musk naturally chooses investment banks that are friendly to him.
The SEC attempted to combat this through regulation in 2003, aiming to separate the research divisions of investment banks from the banking divisions responsible for securing underwriting fees. Seven months ago, this regulation was terminated by the SEC.
Afterwards, former SEC Chairman Arthur Levitt published an article in The Wall Street Journal titled "SEC May Let Wall Street Analysts Be Corrupt Again". He warned of the dangers of canceling this regulation.
I don't think analysts are as influential as they used to be. In the 90s, these analysts were on CNBC all day. But today is different, because there are too many other sources of information.
To some extent, I think these target prices are embarrassing. Years later at a party, people ask you, aren't you the one who said SpaceX would go to $300? Wouldn't that be very embarrassing?
For those unfamiliar with these ratios, no company trades at 100 times sales. This simply doesn't happen. Those companies that trade at very high price-to-sales ratios are software companies, where sales basically convert directly into profit—not many fixed costs. As for SpaceX, it has huge costs: rockets, Nvidia GPUs, etc. It is not only losing money, but losing it astonishingly.
Do you really want to pay 100 times? You have to wait a hundred years to get your money back. Its growth is not fast either: growth rate is close to 15%. SpaceX packages itself as an AI company, but it only has 3.5% market share, so this is really just hype.
The Great Bro Capital Shift
The cryptocurrency market has erased more than half its value in the past eight months, with Bitcoin ETFs seeing $8 billion in outflows over the past eight weeks. Meanwhile, AI has become the new frontier. It is the technology people are most excited about, capturing the same sense of disruption and possibility that cryptocurrency once represented.
Cryptocurrency has lost its cool, and academic research supports this. A recent paper by David Krause, Associate Professor of Finance at Marquette University, pinpoints the turning point to a specific date: January 2024, when the first Bitcoin ETF launched. Krause's argument is that the moment Wall Street made cryptocurrency simple and mainstream, it was no longer cool.
As a proxy indicator for public interest, he measured the frequency with which people searched cryptocurrency terms and visited related Wikipedia pages. After the Bitcoin ETF launch, he found that as of June 2026, Google search volume for Dogecoin fell 63%, search volume for "cryptocurrency" fell 47%, and Wikipedia visits to the two pages fell 76% and 56% respectively.
The only selling point of cryptocurrency is that the price is rising; people want to buy it because they know someone who bought at $1 is now worth $60,000. So it is really just a trend-based asset, something you talk about at parties.
But now, when you say you hold Bitcoin, you are no longer doing something exciting. When the SEC Chairman is a crypto bro, Commerce Secretary Howard Lutnick is a crypto bro, and everyone from Epstein Island is involved... it is no longer anti-establishment. The claims of use cases have also evaporated.
If you want to be exciting, you might tell people you are betting on prediction markets.
Housing Prices Shouldn't Only Rise Without Falling
The US housing market is showing signs of new pressure. Last month, the US median home price hit a historic high, reaching $408,800. In April, the National Association of Realtors reported that the proportion of first-time homebuyers fell to 21%, the lowest proportion since NAR began tracking data in 1981.
This is part of a broader trend: for ordinary Americans, owning a home is becoming increasingly out of reach. In fact, 75% of homes currently on the market are unaffordable for the typical family.
For young people, the housing market looks particularly bleak. Between 2019 and 2024, the inflation-adjusted median home value rose 30%, while the inflation-adjusted median household income for those under 40 rose 9%.
Americans still want to buy homes. 56% of Americans say owning a home represents the American Dream, and nearly two-thirds of Americans who currently do not own a home hope to buy one within the next five years. Affordability issues make this goal harder to achieve—and delay other life milestones. Nearly one-fifth of prospective homebuyers delay getting married or having children until they own a home, and 17% delay career changes or getting pets.
Owning a home is a hallmark of American culture, but it is also seen as a shrewd financial decision. 93% of Americans believe buying a home is "definitely" or "probably" a better investment than buying stocks. But this is not necessarily true.
Moody's compared two individuals with an annual income of $150,000: a homeowner who purchased a $500,000 house (20% down payment, mortgage rate 6.25%) and a renter who pays $2,500 monthly rent increasing 3% annually, with the latter investing the difference at a 10% return rate. After 30 years, assuming average annual rent and house price growth, the renter's net worth is $2.8 million, while the homeowner's is $1.6 million. This analysis did not consider taxes.
If you look at the long-term history of housing prices, there is no reason to believe they should rise. But it has become an investment category. If you talk to your grandparents, they would never talk about the concept of real estate investment. They bought the house they needed to live in.
So how did we get into this situation? The government incentivizes people to buy homes, so they want prices to rise or at least remain stable. You see politicians say, we want young people to have affordable housing, but they don't want to harm the home values of retirees who rely on housing prices, because young people vote less than older people. Well, you can only choose one.
Moreover, if you buy an asset at a historic high, and it seems truly unaffordable for ordinary people like you, this might mean that is not a good investment.
I understand the emotional impulse to own your own place, but emotional impulses are different from investment decisions. If you look at the long-term returns of housing relative to the stock market, housing performs far worse than the stock market.
This conversation has an interesting similarity to the cryptocurrency phenomenon: the momentum supporting cryptocurrency price increases is because people fundamentally believe it will continue to rise. I think there is a fundamental belief among Americans and those who currently do not have a house, which is that housing prices will rise. If you believe this, then you are more motivated to buy a house rather than invest in other things.
The only reason you should assume your house will be worth more in five years than today is: if you invest in renovations to make it better, or if you believe that the specific location where you bought the house will become a hot neighborhood, and everyone wants to live there.
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