Renowned short-seller Jim Chanos has highlighted a stark warning buried in Morgan Stanley’s new bullish research report on Elon Musk‘s Space Exploration Technologies Corp. (NASDAQ:SPCX).
Despite assigning the company an “Overweight” rating, the underwriter disclosed that the space and AI giant faces a multi-year “Funding risk” totaling nearly $700 billion, with “no FCF-positive” cash flow projected until 2035.
Chanos Calls Out Wall Street Optimism
Chanos took to social media platform X to highlight the sharp contradiction between the bank’s optimistic $300 price target and its underlying financial anxieties.
“I know we are only halfway through the year, but I feel it will be hard to top this comment from one of the obligatory buy recommendations on $SPCX issued by one of the underwriters this week,” Chanos posted, calling the equity research disclosure “truly glorious.”
The $672 Billion Cash Hole
The snippet shared by Chanos reveals the steep cost of SpaceX’s physical infrastructure scaling. In the report, Morgan Stanley analysts wrote under a dedicated “Funding risk” section: “We forecast no FCF-positive year before 2035 and average external capital needs of roughly $84bn per year from 2027 to 2034.”
Over those eight years, the required external capital totals approximately $672 billion. The underwriter explicitly warned that if debt markets cannot absorb these astronomical financing needs, SpaceX may be forced to “issue equity, reduce growth investment, or slow deployment.”
High spending needs, including an estimated $300 billion in annual capex by 2031, make securing this external capital “one of the greatest risks to our forecasts,” noted Morgan Stanley.
High Risks vs. High Targets
Morgan Stanley’s base case relies on massive long-term Total Addressable Market (TAM) creation, forecasting SpaceX’s revenue to surge to $3.3 trillion by 2040.
However, the immediate execution risks remain severe. The bank set an intentionally wide valuation range, spanning from a $75 bear case to a $600 bull case, balancing the company’s unique technology against what is now exposed as a monumental capital hurdle.
How Has SPCX Performed?
Listed on June 12, 2026, SPCX shares were down 1.13% since their debut on the bourses. Despite its Monday inclusion in the Nasdaq 100 index, the stock had declined by 13.20% over the last five sessions.
It closed 0.78% lower at $148.30 per share on Wednesday, and it was up 0.81% in overnight trading.
Benzinga’s Edge Stock Rankings indicate that SPCX maintains a weak price trend in the short, medium, and long terms.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Thrive Studios ID via Shutterstock
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