Market AnalysisJul 10, 20262 Min

SpaceX shares wobble despite Nasdaq debut, bullish Wall Street views

Within a month of its listing on June 12, shares of Elon Musk-led SpaceX have joined Nasdaq on Tuesday. This is one of the fastest inclusions of a company ever in the tech-heavy Nasdaq index. Yet, surprisingly, it failed to lift the sentiment around SpaceX shares.

The stock tumbled 6.8% on Tuesday to $149.47, falling below the $150 price at which SpaceX began trading last month, but still higher than the initial public offering (IPO) price of $135.

SpaceX carries a 1.34% weight on the Nasdaq 100, according to LSEG data. Nasdaq adjusts its weight based on free-float or the number of shares available to trade publicly.

Notably, SpaceX had lobbied for a “waiver” available for megacap companies to join the Nasdaq so soon after its stock market debut. According to the US Securities and Exchange Commission (SEC) rules, there should be a waiting period between when a company goes public and when it is listed on the Nasdaq 100 or S&P 500 indices.

The rules say that companies must demonstrate profitability over four quarters for the S&P 500 and three calendar months for the Nasdaq 100, excluding the month of listing, before their inclusion in the indices.

But, after SpaceX lobbied for the waiver, Nasdaq made a rule change in early May to allow the space company to enter the index after just 15 trading days. S&P Dow Jones, however, did not change its rules.

How will Nasdaq inclusion help SpaceX?

Joining the Nasdaq paves way for a lot of passive-buying in SpaceX. Index funds and exchange-traded funds (ETFs) tied to Nasdaq 100 would now compulsorily need to buy SpaceX shares to match the benchmark’s new composition.

Also, the Nasdaq inclusion triggered the beginning of coverage on SpaceX by a flurry of Wall Street firms, offering valuable insights to investors.

More than a dozen brokerages, including firms like Morgan Stanley, Goldman Sachs, UBS, JP Morgan, among others, started coverage of SpaceX on Tuesday with top ratings.

These banks were restricted from making analyst calls on the stock till now due to the so-called “quiet period” for banks that underwrite an IPO. When a private company prepares for an IPO, executives, insiders and underwriters are restricted from promoting the stock or offering new financial projections so that investors can rely solely on the prospectus to make their decision.

The entry of SpaceX into the Nasdaq 100 coincided with the expiry of this quiet period, propelling unanimous bullish views on the stock.

What Wall Street thinks about SpaceX?

JPMorgan Chase initiated coverage on SpaceX with an ‘Overweight’ rating and a price target of $225 per share.

"While SpaceX has already reached a $2 trillion+ market cap post its IPO, we believe significant upside potential remains as the company quite literally builds out the next frontier,” analysts from JPMorgan said. "SpaceX's ambitions — and potential impact on humanity — are bigger than any company's we've ever seen,” they added.

Goldman Sachs gave a ‘Buy’ rating on the stock with a price target of $205 per share. Morgan Stanley issued an ‘Overweight’ with a price target of $300 per share.

“We see the company as one of the few platforms that can link real estate in orbit, global connectivity, and compute capacity into one infrastructure stack,” analysts from Morgan Stanley said.

UBS also initiated coverage in SpaceX with a ‘Buy’ rating and a price target of $210 per share. “We view SpaceX as an unparalleled set of assets with a multifaceted return profile and multiple drivers of upside for long term, risk tolerant investors,” analysts from the bank wrote.