Morgan Stanley’s Adam Jonas Says SPCX Will Need To Raise About $700B In Debt To Achieve Its $22.7 Trillion TAM Ambitions

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During an interview with CNBC, Jonas said that while SpaceX’s recent cloud compute deals are placeholders, it could face growing competition in the future.

  • Jonas said that SpaceX won’t be able to raise funding of that scale unless its business is performing well.
  • He highlighted that SpaceX could face geopolitical risks as well as threats from adversaries in space.
  • Jonas added that Starlink is SpaceX’s cash-flow machine, while noting that CEO Elon Musk’s AI ambitions go beyond simply offering compute capacity to frontier AI companies.

Morgan Stanley Managing Director Adam Jonas on Wednesday said that Space Exploration Technologies Corp. (SPCX) will need to raise about $700 billion in debt to achieve its $22.7 trillion Total Addressable Market (TAM) ambitions for enterprise AI.

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During an interview with CNBC, Jonas said that SpaceX has high ambitions and will need significant investment to achieve them.

“They won’t be able to raise that unless things are working. For folks that are used to Tesla, it’s going to be one hell of a ride. It’s up to investors to decide if the juice is worth the squeeze,” he said.

SpaceX shares were up 0.5% during Wednesday morning’s trade.

Jonas Highlights Risks Associated With SPCX

He also highlighted that SpaceX could face geopolitical risks and threats from adversaries in space. “Space is a warfighting domain. You have adversaries that could dazzle the orbit and disrupt those very valuable assets in space,” he added.

Jonas also said that while SpaceX’s recent cloud computing deals are placeholders, the company could face growing competition in the future. “If you like risks, this is the stock for you,” he added.

SPCX Modeling Is Very Simple, Says Jonas

Jonas said that SpaceX’s modeling is very simple, while noting that the company’s business prior to the recent neocloud deals was based on only two segments: satellite launches and the Starlink satellite internet service.

“It starts with the space business, where their cost is $1,000 a kilo. It’s about 20 times cheaper than the industry average, and with the new architecture of the Starship, the goal is to get it down to $100,” he said.

Jonas added that Starlink is SpaceX’s cash-flow machine, while noting that CEO Elon Musk’s AI ambitions go beyond simply offering compute capacity to frontier AI companies.

According to TheFly, Morgan Stanley has a $300 price target on SpaceX, with an ‘Overweight’ rating, implying an upside potential of 100% from current levels.

What Retail Traders Think Of SPCX Stock

Retail sentiment on Stocktwits around SpaceX trended in ‘bearish’ territory at the time of writing.

SPCX stock is flat year-to-date. The Invesco QQQ Trust (QQQ) is up 28% over the past 12 months, while the iShares A.I. Innovation and Tech Active ETF (BAI) is up 58%.

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