Morgan Stanley warns SpaceX approaching its most dangerous moment

Morgan Stanley warns SpaceX approaching its most dangerous moment

Mwangi Enos

Thu, July 30, 2026 at 8:17 PM GMT+3 4 min read

• SPCX +0.24%
• MS +3.26%

In rocketry, Max Q is the moment of maximum aerodynamic stress on an ascending rocket, the point where the physical forces trying to tear it apart are strongest.

Morgan Stanley borrowed that concept in a note shared with me at TheStreet to describe exactly what SpaceX (SPCX) is about to experience.

The company reports its first quarter as a public company on August 4th. But earnings are almost beside the point.

SpaceX debuted at $135 on June 12, surged to an all-time high of $225.64 by June 16, and has since fallen approximately 50% from that peak to around $112 as of this writing, according to Yahoo Finance.

The stock trades nearly 20% below its IPO price. A market cap that briefly touched $3 trillion, surpassing both Amazon and Microsoft simultaneously, has also contracted to approximately $1.48 trillion as of this reporting.

That $1.5 trillion loss in market cap is larger than Tesla's entire current valuation at $1.17 trillion.

And on August 6, approximately 911.5 million shares, roughly 20% of restricted holdings for eligible employees and early investors, become eligible for sale, according to TheStreet.

At current prices, that represents approximately $100 billion in newly unlockable shares. This is the first of eight tranches that will see nearly 4 billion shares unlock through January 2027, according to the note. Max Q, indeed.

Also Read: SpaceX Latest News and Stories

What Morgan Stanley actually expects from the earnings print

Morgan Stanley maintains an Overweight rating and $300 price target on SPCX, according to the note shared with TheStreet. But the firm's preview was refreshingly candid about what actually matters heading into the print.

The note stated that most investors see this quarter as less about the numbers and more about management commentary.

Key metrics for the quarter include:

• Estimated revenue of $6.75 billion

• Adjusted EBITDA of $2.0 billion

• Adjusted EPS of negative $0.35

• Consumer Starlink subscribers of 12.0 million with a monthly ARPU of $65.50.

• Consensus is slightly above those marks on most metrics, according to Visible Alpha data cited in the note.

The earnings call format itself matters. Morgan Stanley expects it to resemble Tesla earnings calls in style: limited explicit quantitative guidance, high-level directional commentary on Starship timelines, compute deployment pace, and Grok and Cursor model releases.

Investors should not expect hard numbers on Cursor since that acquisition is expected to close later this quarter.

Here is what investors should listen for. Any mention of concrete Starlink enterprise deals, the compute scale-out roadmap beyond 2 gigawatts through 2027, and the joint SpaceX-AI and Cursor model development pipeline.

The August 6 lockup and why it dominates the near-term narrative

Morgan Stanley's note described the current dynamic. Bulls are resigned to waiting past the initial lockup releases to avoid a potential wall of selling, while bears appear to have become gradually more convinced.

Across recent investor meetings, more than two-thirds were bearish on SPCX through year-end, according to the note. The 12- to 18-month view is much more evenly split.

More SpaceX:

The mechanics of the pressure are straightforward. When 911.5 million shares unlock on August 6, early investors who have waited years for liquidity and are sitting on extraordinary returns have a powerful incentive to sell.

Morgan Stanley previously characterized these sellers as "relatively price insensitive," a point the former Nasdaq CEO Bob Greifeld made in my earlier coverage when he described early investors as more focused on liquidity after waiting over a decade than on extracting the last 10% of upside.

The $100 billion in shares becoming eligible for sale against a stock that has already fallen 50% from its peak is indeed the Max Q moment the Morgan Stanley note is naming.

Where the bull case lives at current levels

Morgan Stanley's valuation framework is worth understanding because it frames how the firm justifies an Overweight on a stock trading 20% below its IPO price.

The firm's sum-of-the-parts breakdown: Space at $8, Connectivity at $128, X and Grok at $12, and Enterprise AI at $152, according to the note. The $300 price target implies the market is currently materially undervaluing the AI business embedded in SpaceX, according to the note.

Related: HSBC sends troubling SpaceX stock prediction

At $100, Morgan Stanley noted, SPCX would trade at 18 times fiscal 2028 EV-to-EBIT with essentially zero implied value for the AI opportunity.

That would make it cheaper than Walmart on a forward earnings basis, which trades at 33 times fiscal 2028 PE. The firm described this as "a window for longer-term investors."

The most concrete near-term upside catalyst the note identified is not the earnings print. It is Starship Flight 14, scheduled for late August or early September, which will attempt to catch the Starship upper stage for the first time, demonstrating meaningful progress toward full reusability.

That technical milestone, if successful, is what could shift the narrative for longer-duration holders who have been waiting out the lockup overhang.

Related: Jim Cramer reveals exactly when to buy SpaceX dip

This story was originally published by TheStreet on Jul 30, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.