12 Months From Now, Will You Wish You Bought SpaceX Today?
Houston, we have a valuation problem.
By Steven Porrello
Space Exploration Technologies (SPCX 3.44%), or SpaceX, couldn't have had a better initial public offering (IPO). After raising an unparalleled $75 billion, which rose to $85.7 billion after underwriters sold more shares via overallotment options, SpaceX closed its first trading day with a market cap north of $2 trillion, the only company to ever debut at that valuation.
As of June 18 (pre-market), SpaceX has reached $2.5 trillion, briefly surpassing Amazon as the fifth-most-valuable company in the world. Shares have been flirting with $200, though now that the initial excitement is starting to wear off, investors will see how this stock trades sans the excessive exuberance.
Will the next year favor this megacap space stock -- and better yet, will investors regret not buying SpaceX at today's price if it does?
Expectations for SpaceX are orbiting far above the atmosphere
No stock has generated as much excitement at its IPO as SpaceX, yet a comparison with Meta Platforms at its debut could be illuminating.
The company known at that time as Facebook was valued at over $104 billion before its opening day -- one of the largest IPOs in history -- but shares fell over 30% within its first year of trading. It took a set of aggressive acquisitions and a complete overhaul of its advertising platform before investors were convinced this stock had legs. Since its IPO, Meta stock has delivered a gain of almost 1,400%, and its market cap is a little less than SpaceX's at $1.44 trillion.
In 2026, SpaceX is arguably a much more mature business than Facebook was in 2012. Last year, revenue clocked in at $18.7 billion, up 33% from 2024, and that figure could very well double in 2026, if not generate more. Elon Musk would be "surprised" if SpaceX weren't bringing in at least $1 trillion in 2031, while Morgan Stanley sees revenue reaching $3.4 trillion in 2040.
Even with these strong revenue projections -- and they are, to be sure, just estimates -- SpaceX's valuation is hard to swallow. Today, the stock trades at about 134 times sales, which is redolent of the dangerously high valuations of the late-'90s dot-com era.
Even if revenue grows to $36 billion for 2026 -- a figure that Morningstar analyst Nicolas Owens estimates -- the stock would still trade at nearly 70 times forward sales. Like rockets, that's a multiple that needs flawless execution to reach new heights.
A year from now, SpaceX could be carrying a higher market cap. But here's the part that bothers me: It could also be carrying half its current valuation without any fundamental change to its underlying business. Its business could, in fact, get stronger, and the multitrillion-dollar valuation would still look pricy by traditional standards.
A triple-digit P/S is a warning sign flashing the words "volatility ahead." You don't have to wait a year to buy SpaceX, but waiting until these early days of extreme enthusiasm wear off might be the most prudent thing for long-term investors.