Following SpaceX's IPO, underwriting banks like Goldman Sachs and Morgan Stanley have published research, all recommending a 'buy' with price targets such as $205 and $300, respectively. Raymond James even set an $800 target, implying a $10tn valuation. Despite these bullish outlooks, the current share price of around $125, down from its post-IPO peak, suggests investor skepticism. Independent research from Morningstar valued the shares at $63.

This situation echoes the aftermath of Eliot Spitzer's reforms, which aimed to separate equity research from investment banking to ensure objectivity. While robust compliance now exists to prevent direct influence, the author questions whether underlying incentives have truly changed. Analysts may not be directly pressured, but their desire to participate in lucrative deals and maintain access to management and investors can implicitly shape their views.

Professional fund managers generally do not rely on sell-side recommendations for capital allocation, instead building their own models and acknowledging potential biases. While retail investors might follow ratings, the primary audience for this research appears to be the companies themselves, who appreciate endorsements from major banks. The author posits that analysts, like the fish in David Foster Wallace's parable, may be unaware of the "water" of prevailing market sentiment that shapes their views, making overt direction unnecessary.