Prof G Markets - SpaceX Is Down 40% — How Low Can It Go?

Episode Date: July 16, 2026

Ed Elson is joined by Nicolas Owens to break down how SpaceX shares fell below their IPO price and where the stock might go from here. Then, Bradley Tusk returns to discuss New York’s statewide data center moratorium and whether other states might follow suit. Finally, Ed gives his take on the Treasury Department's new gold coins. Nicolas Owens is an Equity Analyst at Morningstar. Bradley Tusk is a venture capitalist, political strategist, and writer. Subscribe to the Prof G Markets Youtube Channel  Check out our latest Prof G Markets newsletter Follow Prof G Markets on Instagram Follow Ed on Instagram, X and Substack Follow Scott on Instagram Send us your questions or comments by emailing [e-mail] Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Welcome to Profi Markets. I'm Ed Elson. It is July 16th. Let's check in on yesterday's market vitals. The major indices rose after another inflation reading from the producer price index came in cooler than expected. Treasury yields fell. Brent Crude had another volatile day as the U.S. continued to strike Iraq. and finally, Apple stock hit an all-time high after announcing it will integrate Alibaba's Kwan model into Apple Intelligence in China. Okay, what else is happening? The largest IPO in history is officially underwater.

Yesterday, SpaceX fell below its $135 IPO price for the first time, touching an all-time low of $132.75. The stock has now dropped 40% from its peak, wiping away more than a trillion dollars in value. That downfall comes just one month after a debut that raised a record $86 billion and briefly made Elon Musk the world's first trillionaire. The new low also comes just one week after SpaceX joined the NASDAQ 100. That means that the index fund and the millions of Americans whose retirement accounts track it

bought in right before a 10% decline. It also means, more importantly, my SpaceX prediction is on its way to becoming reality. on June 10th, I said this. Here is my prediction for what will happen tomorrow. As soon as it hits the market, SpaceX stock will immediately explode 25%. However, my other prediction is that within six months, probably sooner,

SpaceX stock will be cut in half. Why? Because the valuation makes no sense whatsoever. Almost two for two. We'll see. Joining us to discuss SpaceX's decline, we're speaking with Nicholas Owen's equity. analyst at Morningstar. One of the few analysts who has been bearish on this stock, Nicholas,

thank you for joining us on the show. Just as a reminder for our audience, you published your SpaceX research before the IPO. You valued the company at $62 per share. So even lower than where we are now, of course, just walk us through your valuation again as a reminder. The $62 is a result of three scenarios, you know, a bowl case, a medium case, and a bear case, and some probabilities that we assigned to those. Only in the bull case do you get into the $130, $150, $160 range. The problem is that depends on so many things going right that we think there's only a 7% chance of that happening.

So that's where you get to a weighted average fair value of $62. You know, the medium case on its own is about $71 a share. So I think we're in the same camp, if you will, thinking about havesys valuation-wise. Just looking at what's happened so far, so the stock, I mean, obviously it popped immediately, as I thought it would. It continued to rise, and now it's coming down. I mean, it's been pretty quick the way this has happened, especially considering the fact that it joined the NASDAQ 100 so recently, what do you make of how quickly it has started to drop back down? I think this is a really good point. I think there's two kind of buckets that I would want to point out there. First of all, maybe working. backwards. It's quick, I think partly because the flow is still so small, only four-ish percent of the company. But then on top of that, and I go back and forth between thinking about the

fundamentals, like what do you have to believe about AI data centers in space, et cetera, or what the margins on that might be in 10 years. And then you go to just the market, the supply and demand for the shares themselves, right? So both of those should drive the price. So I think here you have, in the next couple weeks, I think they're supposed to announce earnings August something, August 8th or 9th, and two days after that, a whole other 7% of the company can be sold by insiders. So that's supply. And then I wanted to comment on the NASDAQ 100 inclusion, which is notable because it was a result of some changes in their methodology and so forth. But I think actually not even that huge a deal in terms of demand.

So I googled what's the market cap of all the funds that tracked the NASDAQ 100 and something like $800 billion. Or if it's $800 billion and they're waiting it at 1%, that's $8 billion of demand. That would have been a result of that inclusion, which does not offset if you look at the market cap and even with the float, you know, the potential supply of someone who bought it at 135 and was selling at 156 or whatever in the last. a couple weeks. One of the crucial things you mentioned there is the fact that we haven't even gotten to the lockup expirations yet. I mean, that was what I was kind of waiting for is as soon as people can sell, my assumption is there are a lot of people who are very rich on paper right now.

As soon as those lockups expire, I assume they're going to want to sell and maybe go out and buy a boat or buy a house, whatever they want to do. That hasn't even happened yet, and yet the stock is still declining. surely that means it can only keep going down. What do you think will happen? I think that seems likely my, I think, two kind of, so I go back then to the fundamentals. What are maybe some changes in what people believe about what's,

you know, what drives the value of this stock? There is certainly the Starlink business, which is actually kind of the gem, you know, right now. But you have motivated competitors making some advances in their launch and their technology. Ironically, I think that the economics of this business may resemble the terrestrial telecoms business where Morningstar would call it an efficient scale source of moat, which is problematic because the more players there are the worst the economics get.

So SpaceX is kind of king of the hill there, and having an eager competitor launching a bunch of satellites looks like a capacity. glut could happen, and so pricing doesn't look as good. So there's maybe some overhang, even on the Starlink case. In terms of AI, there's so many assumptions you have to make to get to these upside scenarios. And the payoff there, you know, is in, let's call it decades. And there's a couple news items I would point to meta starting to rent out capacity, open AI probably delaying their IPO, those are things that would make people question the thesis of what is the ROI on all these investments that have been made? And SpaceX today looks a lot like an infrastructure

play and also an LLM that is not in the top ranks, shall we say. So lots to question. And when you look at some of the research that we've seen from some of the other Wall Street analysts, to be clear, 27 of the 31 analysts who cover this stock have recommended it as a buy, and the average price target is, shockingly, $242 per share. One analyst gave it a price target of $800 per share, which would value it at $10 trillion in market cap, which would make it by far the most valuable company in the world, like double Nvidia, double Apple. I mean, it's just nuts.

What are your reactions to some of the other price targets that we've seen, given the fact that you rate it at 62? I would sort of like to go back to first principles, and I would say things like the market works on disagreement. And it's really good that investors have, let's say, different sources of information about what do you have to believe to buy this or that version of what the stock might be worth? I think there's also a methodological difference. I have a discounted cash flow model. We have forecasts out to 2045. We're discounting those today. So we're saying these shares are fundamentally worth $62 today. Again, probability weighted. A lot of those that you're referring to, they're doing things like, oh, let's get to 2027, 2028, when they might be making money a little bit, and then we're going to put a 100x multiple or something on that number. And they're doing some of the parts, you know, with Starlink and AI and so forth. But that is a different methodology that gets you. And again, I think when you're doing a multiple, you're baking in assumptions that are not

necessarily being stripped out. You're making growth rate assumptions and discount rate assumptions that we always are very explicit about at Morningstar. So I think that's as much of a compared and contrast as I'd be comfortable doing. Fair enough. It's a polite way of putting it. Just looking ahead for the rest of the year, I mean, we've got the supply of the new shares coming down the pipeline. We've got, I mean, as you mentioned, right after the Q2 earnings report, lots more supply because of the lockup expirations. But then it's going to continue for the rest of the year. Lots more investors will be able to sell. Given all the information at our disposal, do you have any thoughts on how the

stock will perform over the course of the year? Honestly, I think you could go either way, and I'll tell you why. So with everything we've said, right, there's certainly some, a lot of items in the, you know, in the negative column in terms of supply of shares and small changes in people's sentiment can make a bigger move, again, given the smaller float. You could say a positive argument is the float will actually increase with each of these lockups expiring. And depending on what investors' appetite is, you know, the price could find a new direction. And I'll say, too, I expect a quarterly report to be glorious. You know, we have pretty good growth rates for even for 2026. And I think if they did it kind of according to what I think of as the classical IPO playbook,

they've got two quarters of numbers pretty much in the bag that they will be happy to share. Right. And I'm looking mostly at those rental agreements with Anthropic and Google and the other one that are pretty nice chunks of revenue at low marginal cost. They're still spending a lot, et cetera. But anyway, I think you'll see some nice comps, you know, and then it might be people might be more comfortable thinking, oh, you know, AI might be whatever, cash flow neutral in 2033 or whatever the story ends up being. So I'm not excluding the possibility that there will be some good news there, and it wouldn't take much in terms of, let's say, the collective appetite, if the story turns positive again. So I wouldn't sit here and say it's totally going to crater. That said, there has to be more demand than supply for the stock to go up. It's, again, first principles.

All right. Nicholas Owens, equity analyst at Morningstar, very respectfully bearish, which we always appreciate. Thanks again for joining us, Nicholas. Thanks so much. After the break, New York hits pause on data centers. And for even more markets insights, you can subscribe to my weekly newsletter, Simplyput, at simplyput.com.

It all started with Call Meady. Over 10 years ago, we created Switched on Pop to Listen Closer, uncovering the songcraft behind even the glossiest of pop hits. Since then, we've released almost 500 episodes. We've defined the sounds of our modern soundtrack and interviewed hundreds of musicians and music insiders, including the singer of Call Me Maybe herself, Carly Ray Jepson.

I'm musicologist Nate Sloan, and I'm songwriter Charlie Harding. And on July 14th, Switchdown Pop is embarking on a new chapter. We're stepping out from behind our microphones and in front of the camera to stream our podcast on Netflix. Now, you'll still be able to listen to the show anywhere you get podcast, But now you'll be able to watch us each week, breaking down the sounds of the moment, digging into musical minutia with your favorite artists and offering questionable dad jokes, as always. We're kicking off our Netflix debut with a four-part series on The Art of the Song with help from artists, producers, and songwriters like Aaron Destiner, Audrey Hobert, Trevor Horn, Cypress Hill, and Taylor Parks. Stream switched on pop on Netflix and anywhere you get podcasts every Tuesday, starting on July 14th.

Is Kamala Harris running for president again? Listen, I might. I might. I might. I'm thinking about it. But does anybody want that? Yeah. Yeah? I do.

Well, I don't see why not. Absolutely, I think Kamala Harris could run for president again. I don't think there'll never be a woman president in the United States. Now, why, wait, you can't just walk away on that. Tell us why. I know it's still early to talk about 2028,

but as we build to our post-Trump future, It seems to be a big question about the Democratic Party. Kamala Harris leads all of the presidential polling. So does this mean that the person who led the ticket in 2024 is going to lead the party again in 2008? The campaign needs to be called bye-bye. It's just a tainted brand. Do you think from a donor community largely

that there's any appetite for a Harris return? I don't. I'm a Sted Herndon. And this is America Actually. Catch us every Saturday. on YouTube or wherever you get your podcast. We're back with Profty Markets. New York just issued the country's first statewide data center moratorium.

Governor Kathy Hockel signed an executive order on Tuesday that pauses state permits for the largest AI data centers for one year. During that pause, the state will write rules to protect the environment, the grid, and rate payers. The move comes amid growing opposition to data centers nationwide. A recent Gallup poll found that seven in ten Americans oppose constructing data centers in their own community, and local resistance has already delayed or blocked nearly $130 billion worth of projects

in the first quarter of 2026. The big question now is, will other states follow New York's lead? Joining us to discuss this, we're speaking with Bradley Tusk, venture capitalist political strategist and writer. Bradley, good to see you. Thank you for joining us. That is my first question. Is this moratorium the first of many?

Yes. Now, I don't think it's sort of an absolute yes, but let's work off the basic thesis, which pretty much defines everything that I do, which is that every policy output is the result of a political input. Every politician makes every decision solely based on one of the next election and nothing else. If you assume that's the case in 34 years in politics has taught me that that's the case, then you look at the unpopularity of AI across the board, then of course politicians are going to pass bills and regulate. and signed executive orders that come off as anti-AI. And we've seen lots of stuff happen in this past legislative session, which wrapped up about a month ago kind of across the country, where new laws regulating chatbots, new laws regulating AI use in insurance, new laws regulating AI use in healthcare in hiring, data centers. So there's a lot of areas of it because politicians want to seem responsive to the voters. And data centers are particularly controversial.

However, I also do think when you read the governor's executive order, it does kind of point towards a resolution of all of this that I think is pretty doable. And I will say that Kathy Hockel for a Democrat is really pro-business. So when she did this, that's an indication of one, how powerful this issue is. She is also up for re-election this fall, and she's not stupid by any means politically either. But I think that she did sort of lay some breadcrumbs as to how this fall was. works out. And to me, really, there are kind of three things that if data centers say, hey, we can do these things, most of this is pretty resolvable. So one is energy. And the thing that made that it's data center so unpopular is that initially the ones in Northern Virginia, in Georgia,

were just plugging into the grid. And by doing that because of their vast energy consumption, people's electricity bills were going up 30, 40 percent. And they're saying, why am I subsidizing Sam Altman. Why am I subsidizing Anthropic? And of course, they shouldn't do that. If data centers are required to either bring their own power or pay for their own costs and not impose those negative externalities than anyone else, that solves a lot of it. So that's number one. Number two is water usage. And even though it doesn't get as much attention, data centers, when you have a system that big requires a lot of water for cooling, there are things called a closed loop system that are really not that hard to install. And a data center can be built in a way that it brings in

its own water. It circulates it, refrigerates it, it meets its own needs, and it's not drawing from the water utility itself or the risk of it then putting polluted water back into it, like you just saw with a metadata center recently. And the third would be a relationship with the data center itself is a benefit to communities. One challenge the data centers have is they don't create a lot of jobs. They create some construction jobs. They create some construction jobs to some of the building trades unions like them, and that's great. But long-term permanent jobs, it's really not all that many. So if you're going to be in a community, how can you help it? Are you going to help pay for energy grid improvements? Could you pay for some sort of property tax

rebate? Could you pay for libraries and parks? And I think the good data center builders and hypers are open to these ideas. And so I do think there's a solution here, but it's not just going to be, hey, AI is a national security issue, so we're just going to put these wherever we want, and everyone just has to suck up and bear the cost of it. Something I can't quite tell from this legislation is how genuine it is. I think it's certainly an element of this, which is like she wants, she's running for re-election.

It is more popular to be anti-AI today just based on the numbers, which makes me think, okay, maybe, I mean, it's unclear if this is actually an anti-AI policy, or if this is just pressing pause, pretending to be anti-AI policy, and then it's actually something else? I mean, where is it? I think you may be giving politicians too much credit in your question itself there, right? Which is you're almost assuming there's substance, there's politics, and where's the distinction? I don't think there is a distinction, right?

It's politics and then substance gets impacted by the politics of it. But I think the reason that the governor did, the executive order as opposed to signing the legislation, what's just sort of not further the notion that data centers in and of itself are a bad thing. Because we do need data centers, right? You can't have a country whose economy is so relying on AI, who's international security kind of race around AI with China, and then not have the ability to actually power AI. So clearly we need data centers,

but needing them and then imposing costs on voters and consumers are two different things, and I think that they are reconcilable. So I think what Governor Hockel was trying to do is, not in any way in peril her re-election bid because she's a politician first, and I don't want to pretend that she's not. But within the realm of politicians, because I do work with her enough to know her reasonably well, she is pretty pro-business, she is pretty reasonable, she's pretty moderate, she's the furthest thing from a DSA-type Democrat. And so I think she was trying to split the baby a little bit. Where do you think this goes from here in terms of data center regulation?

because if she's the pro-business governor who is putting a moratorium on data centers, it makes me think that we're going to see even stricter anti-Data center regulation going forward. So earlier this year, Vermont and Maine did both pass moratoriums that were vetoed by their governors. Now, the governor of Vermont happens to be a Republican. The government of Maine is Janet Mills, who's a pretty moderate Democrat like Hockel. But in Oregon, a Washington state, are we going to start to see? the most left-wing states potentially do this? You know, absolutely.

But here's one thing that's really important to understand about the politics and regulation of AI. It's really not that partisan, meaning that when you look at the different types of AI regulation and legislation that have been enacted over the past year, it's not just the left. It's red states and it's blue states. It's rural states and it's urban states. And so fundamentally, the polling and unpopularity of AI kind of cuts across all of the

normal partisan lines and ideological spectrums and everything else. And so I think politicians on all sides are certainly concerned about this. Final question. A very important politician bashed this decision. President Trump said, quote, one of the biggest driving forces in the future for jobs are data centers. New York State has made a terrible decision. So he has come out publicly pro-data centers. What does that do to his political standing? I mean, I'm not quite sure what he means by one most important sorts of jobs because data sensors themselves don't create a lot of jobs. I assume what he means is that the AI economy powered by data centers needs data sensors, and he's right about that, and he is the one that put together the whole Stargate program that was Open AI committing $1.4 trillion

in CAPEX4 data centers. So I guess he feels some ownership of it. And in terms of his own personal finances, you never know what this guy won't way or another. But, you know, even he clearly has started to lean into the regulation of AI. He had an executive order a little over a month ago that asked the hyperscalers to give them, beating the U.S. government, advanced copies of frontier, new frontier models like Methos from Claude before they're publicly released. And so even Trump, I think, understands which way the wind is blowing. And so to a certain extent, he's probably trying to have its cake needed to, but also it's quite possible he doesn't even really understand what data centers are. And someone said something to him, and then he fired off a post

and didn't even realize what it was. Yeah, I'm probably giving him too much credit to say there's any strategy to it. Yeah, I think, Ed, the recurring theme of this interview has been you keep giving politicians way too much better. Okay, I'll stop doing that going forward. Bradley does his venture capitalist, political strategist, and writer. Bradley, really appreciate your time.

Thank you. Happy to come on, fix it. Exciting news from the Treasury Department. The United States will start producing new $1 gold coins emblazoned with the face of President Donald Trump. That makes Trump the first sitting U.S. president to appear on our national currency, but he will join a long line of other international leaders who featured on their currency while in office,

including but not limited to Saddam Hussein, Gaddafi, and Mao Zedong. So, you know, he's in good company. According to Treasury Secretary Scott Besant, the Trumpified coin, quote, celebrates the strength of American values. We're not sure what values he's referring to specifically, but they may include idolatry, greed, corruption, hubris.

After all, these are the hallmarks of any self- idolizing political leader, especially ones who have literally flirted with the label of dictator. And so it does appear that we are approaching, I don't know, the end times. And it's not just the gold coins. It is not just the gold statues. It's also the billions of dollars that were stolen from households via a literal Ponzi scheme called Trump coin. It's also the dozens of children who were sexually abused by his confident, Jeffrey Epstein, and all of the other young women who were clearly exploited, if not directly by Trump, then certainly indirectly through his social circles. It's also the fact that all of this was covered up by an administration that has systematically

rewarded sycophancy and punished integrity. And if you don't believe me on that, just search up the name Margaret Ryan and you will understand what I mean. It's also the $5.6 million that he just paid this week a settlement in a lawsuit that literally found him liable of sexual abuse by a jury of his peers. It's the bombing of other nations with no real contingency plan. It's the accidentally murdering 120 children in a drone strike and then never actually acknowledging why or how that happened. It's the pardoning criminals and the threatening allies

and then suggesting that we should invade them. It's a lot. And so what better way to commemorate this individual than to enshrine him on the legal tender of the United States? Let's put him in the ranks of George Washington and Benjamin Franklin and Abraham Lincoln. Now, you might say that I have Trump derangement syndrome. You might say I'm, I don't know, brainwashed by the media, but anyone with two eyes, a brain, and a basic understanding of history knows exactly what's happening here.

And that is, this is what third world countries do. and if you cannot acknowledge that, or you feel a need to justify it or explain it away or downplay it by any measure, then, dare I say it, you have been brainwashed yourself. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Brad Williams.

Our research team is Dan Chalon, Kristen O'Donohue and Mia Silverio, and our social producer is Jake McPherson. Thank you for listening to Procty Market. from Profitley Media. If you liked what you heard, give us a follow. I'm Ed Elson and Tudum tomorrow for our conversation with Mike Novogratz.