Wall Street is starting to examine space x In a bullish case, CNBC’s Jim Cramer said Wednesday that this is a sign that Elon Musk’s ambitious vision may be becoming a reality sooner than investors expected.
“Raising price target, Space Exploration Technologies,” the “Mad Money” host said. “Please get used to it.”
Goldman Sachs was one of the latest companies to raise its price target on SpaceX. Analysts raised their rating to $230 a share from $220 a share and reiterated a buy rating in a note Tuesday. SpaceX’s new target suggests an upside of about 37% from Wednesday’s closing price and about $5 a share above the stock’s all-time high of $225.64 on June 16, just days after its record initial public offering.
Cramer said the importance of Goldman’s call goes beyond the $10 increase in stock price.
Shortly after hitting this record high, SpaceX fell into trouble. Cramer said Goldman’s initial price target of $220 appears more ambitious than analytical when the stock traded as low as $104.83 in early August. The company’s decision to raise its target even though the stock price remains well below target suggests to Cramer that its initial valuation is becoming more reliable. “The $10 increase from $220 to $230 confirms the previous $220 figure and implies a stock price of $167,” he added. “Perhaps there is considerable rigor in this analysis.”
Mr. Cramer has repeatedly defended SpaceX against critics who see it as an expensive stock favored by retail investors. The company’s stock currently trades at about 137 times estimated earnings per share for the next 12 months, according to FactSet. He said the valuation reflects a company with several avenues for growth, from its Starlink satellite internet network and reusable rocket business to long-term data center ambitions. SpaceX also makes money by renting excess computing power to: human and of the alphabet Google.
Its computing business is clearly on track to become an even bigger part of the bull market, as evidenced by media reports that SpaceX is looking to raise an additional $40 billion to buy more Nvidia chips and expand its business. The Financial Times, which first reported the matter, said the deal could include $10 billion in bank loans and an additional $30 billion in investment-grade bonds.
“Why not? Musk could monetize these chips right away,” Cramer said. “At this rate, SpaceX could become Nvidia’s largest customer, which is great news for both parties.”
Kramer still doesn’t think SpaceX is a good fit for his philanthropic trust (the portfolio used by CNBC’s investment club), but said the company’s progress is making the once-ambitious company’s potential increasingly tangible. “Club members, take note, because it’s looking increasingly likely that SpaceX will materialize much sooner than planned.” tesla I’ve never done it,” he said.
Of course, Nvidia has had a portfolio of clubs for years. Cramer said at the club’s morning meeting that SpaceX’s funding would also be a win for Nvidia. “Musk is doing what[NVIDIA CEO Jensen Huang]outlined: ‘If you buy our computing and rent it out, you can make a lot of money,'” he added.
