SpaceX may already be one of the world’s most valuable companies, but Citi believes its biggest growth story is still ahead.
The investment bank has started coverage of Space Exploration Technologies (SpaceX) with a Buy rating and a $200 price target implying about 25 percent upside by the end of the year.
More importantly, Citi argued, the target is just a first step, with the company’s valuation potentially rising above $900 a share if it meets a series of ambitious engineering goals.
Citi’s optimism is based on SpaceX’s next-generation launch system, Starship. The bank believes that if Starship can prove to be reliable at scale, it could drastically lower the cost of sending people and cargo into space, potentially opening up commercial opportunities that have been out of reach so far.
“SpaceX is at the beginning of a particularly catalyst-rich two to three years,” Citi wrote, adding that the company is well positioned to establish dominant positions in both connectivity and artificial intelligence.
Starship could redefine the economics of space
Analysts say Starship is more than just a rocket. It could form the basis for an entirely new space economy by making launches cheaper, more frequent and much more scalable than existing alternatives.
Citi says that advantage gives SpaceX a lead that competitors are unlikely to close any time soon.
The bank’s said the company’s launch capabilities are “unrivalled for the foreseeable future” and could help SpaceX tap into trillion-dollar markets that few other companies can realistically pursue.
Rockets are still the company’s bread and butter, but Citi’s investment thesis goes far beyond launches.
Much of the story is about Starlink, SpaceX’s rapidly growing satellite internet network. The service already connects customers in dozens of countries, and Citi expects demand for satellite-based broadband to keep increasing as governments, businesses and consumers look for reliable high-speed connectivity in areas that lack traditional infrastructure.
The bank also sees AI as another major growth opportunity. SpaceX’s combination of launch capabilities, satellite infrastructure and engineering know-how gives it a platform to build AI services for enterprise customers and future space-based computing applications, though its AI ambitions are still nascent, Citi said.
Combined, those businesses could take SpaceX beyond a launch provider into a broader technology and infrastructure company.
Citi sees catalyst-rich years ahead
The coming couple of years will be especially crucial, with many significant catalysts due to come, such as continued success of Starship milestones, expansion of Starlink constellation and development of the company’s AI-related activities,” Citi noted.
The view of the firm comes as SpaceX is set to enter the Nasdaq 100 Index on Tuesday, with the inclusion likely to bring in billions of dollars of passively managed funds, which invest automatically into all newly added companies in the benchmark.
Just last month, JPMorgan suggested that simply joining the index may bring as much as $4.3 billion of inflow into SpaceX stock.
Meanwhile, several Wall Street firms began covering the company lately and issuing positive recommendations, owing to growing optimism about the company’s future prospects.
But not just the near-term target of $200 per share is what Citibank sees for the future of the company.
In particular, Citi said that the $200 target was only an intermediate goal and that the valuation of the stock above $900 per share was possible in case of commercial success of Starship and further expansion of the company in satellite communication and artificial intelligence sphere.
