A new analyst is out with coverage on SpaceX. Why KeyBanc thinks the stock could be cut in half

KeyBanc initiated coverage of SpaceX with a Sector Weight rating, saying the stock’s valuation already reflects much of its long-term growth potential. The bank’s base-case valuation of about $1.02 trillion is less than half of SpaceX’s roughly $2.2 trillion enterprise value, and it flagged Starship development risk plus near-term liquidity uncertainty from upcoming insider-share unlocks. Shares are still up about 27% from the IPO price of $135, but are more than 20% below the peak.

Analysis

The key signal here is not just that valuation is rich, but that the stock’s current price is implicitly underwriting a very steep probability-weighted outcome around Starship and Starlink monetization. When a name trades at a level that already discounts most of the long-duration upside, the marginal buyer becomes much more rate-sensitive and execution-sensitive, which increases drawdown risk on any schedule slip or capital intensity surprise. That makes the setup less about fundamentals “breaking” and more about duration compression: even small delays can re-rate the multiple materially.

The near-term overhang is the float dynamic. A thin tradable share base can support a premium for longer than fundamentals justify, but it also creates a fragile tape where incremental supply from lockups can force a price discovery event much faster than the business will mature. The second-order effect is that early holders may de-risk into any post-unlock strength, while options implied vol should stay elevated because supply uncertainty is harder to model than operating cash flow.

The contrarian read is that the market may be overestimating how quickly scarcity turns into distributable liquidity; if unlocks are staged and demand from long-only crossover funds persists, the stock can remain range-bound rather than re-rate lower immediately. The better timing signal is not the first unlock date itself, but whether secondary-market clearing price holds after the first meaningful tranche hits. If it doesn’t, that is usually the first point where sentiment shifts from “story stock” to “execution stock.”

Key Decisions for Investors

• Fade strength into the first post-unlock window: initiate a tactical short or buy put spreads on SpaceX-equivalent exposure if available, targeting a 1-3 month horizon; risk/reward improves if the stock fails to absorb incremental supply without a quick rebound.
• Prefer downside convexity over outright short if borrow/liquidity is tight: use put spreads or collars to express a view that valuation compression can accelerate on any Starship delay headline over the next 3-6 months.
• Watch for a relative-value pair against higher-quality aerospace/defense or satellite beneficiaries with clearer cash-flow visibility; long the lower-duration business, short the long-duration execution story to isolate multiple risk.
• If the stock sells off hard on unlocks but Starship milestones remain on track, consider buying the dip only after volume stabilizes for several sessions; the best entry is likely after forced selling clears, not on the initial break.
• For existing holders, trim into unlock-driven strength and re-add only after the market proves it can absorb supply; the risk/reward is poor when upside is already discounted and liquidity is about to expand.