Not What EchoStar Investors Signed Up For: TD Cowen Points To Red Flags In Potential SpaceX-xAI Merger

• A SpaceX initial public offering has been the talk of the town since late last year and has benefitted smaller rivals and their stocks, including EchoStar and Rocket Lab.
• SpaceX is reportedly targeting a valuation of around $1.5 trillion, which would place it near Saudi Aramco’s market value at the time of its record $29 billion debut.
• TD Cowen warned of a “huge cash burn” at xAI, potential dilution, deal-related uncertainties, and subsequent profit-taking.

A potential merger between SpaceX and xAI could be on the horizon ahead of Elon Musk’s plan to take his rocket company public later this year, but EchoStar investors appear unimpressed by the reported move. 

Shares of EchoStar plunged 12% on Thursday, marking the stock’s worst single-session decline in six months. TD Cowen said the buzz about SpaceX and xAI merger was “not what EchoStar investors signed up for.” A SpaceX initial public offering has been the talk of the town since late last year and has benefitted smaller rivals and their stocks, including EchoStar and Rocket Lab.

Shares of EchoStar jumped 375% in 2025, largely driven by its stake in SpaceX and its pivot from a wireless operator to an investment company following the sale of about 75% to 80% of its spectrum portfolio for roughly $43 billion.

SpaceX IPO And Merger

SpaceX is reportedly targeting a valuation of around $1.5 trillion, which would place it near Saudi Aramco’s market value at the time of its record $29 billion debut. The initial public offering would seek to raise well over $30 billion.

Reuters reported on Thursday that under a SpaceX and xAI proposed merger, shares of xAI would be exchanged for shares in SpaceX, and some xAI executives could also be given the option to receive cash instead of SpaceX stock.

TD Cowen maintained its ‘Buy’ rating and $158 price on EchoStar, according to TheFly. The firm said that the “unsubstantiated media reports that SpaceX and xAI are in talks to merge” are “not what incremental investors signed up for.” The firm warned of a “huge cash burn” at xAI, potential dilution, deal-related uncertainties, and subsequent profit-taking.

In December, UBS said EchoStar’s 3% SpaceX stake, now implied at about $22 billion or roughly $65 per share, assumed an $800 billion valuation and represented a significant upside versus prior marks.

What Is Retail Thinking?

Retail sentiment on EchoStar jumped to ‘extremely bullish’ from ‘bullish’ territory a day ago, with message volumes at ‘extremely high’ levels, according to data from Stocktwits.

Sentiment around SPACEX was within the ‘neutral’ territory, while retail sentiment around xAI was ‘extremely bullish.’

A user on Stocktwits noted that EchoStar’s reaction indicates how the market will respond to SpaceX’s IPO if it occurs after the merger with xAI.

Shares of EchoStar have more than quadrupled in the last 12 months.

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