SpaceX (SPCX) shares tumbled 7.8% on Wednesday and extended losses in premarket trading Thursday after Elon Musk flatly denied a Wall Street Journal report about a prototype AI-powered handset, and two new analyst notes raised alarm over the company’s valuation.
Musk’s response on X to the WSJ story was blunt: “Utterly false.” The report had claimed SpaceX was showing investors a sleek device running a custom OS, integrating xAI’s technology and Qualcomm Snapdragon chips. Qualcomm shares briefly rose before Musk’s denial pulled them down 1.55%. A Reuters report in February about a Starlink-connected mobile device was similarly dismissed by Musk, though he previously said a Starlink phone was “not out of the question at some point.”
The phone controversy sits inside SpaceX’s broader push into AI, with billions being spent on infrastructure, xAI’s Grok model integration, and even space-based data centers. Yet the stock, which had already surrendered most post-IPO gains, faced fresh pressure from new analyst coverage.
Daiwa launched with a Hold rating and a $175 price target. The sharper critique came from Kailash Concepts, which flagged SpaceX trading at roughly 100 times trailing sales—a level they called “catastrophic” for forward returns. The firm noted that stocks above 10 times sales underperform the S&P 500 two-thirds of the time over three years. Overall, among 13 analysts, seven rate it a Buy, with targets ranging from $165 to $310, but major IPO underwriters have yet to publish.
Adding to jitters, lockup expirations loom. After Q2 earnings expected in mid-August, insiders can begin selling 20% of eligible shares, with further tranches unlocking at 70, 90, 105, 120, and 135 days post-IPO. Kailash also pointed to Elon Musk’s history of delayed promises, noting Tesla’s autonomous vehicle timeline. SpaceX is currently down about 22% from its post-IPO peak, and if historical patterns for mega-IPOs hold—the average largest U.S. IPOs since 2006 fell 50% from their IPO price at some point—further declines cannot be ruled out. On a positive note, inclusion in the Nasdaq-100 Index after July 6 could bring passive buying support.
