SpaceX Stock Is Now Well Below Its IPO Price. Here's Why I Still Wouldn't Buy Shares.
SpaceX stock has fallen nearly 45% from its IPO price, but the company still looks overvalued. Despite its growth potential, SpaceX faces risks in its Starship program and uncertain profitability.
Intelligence analysis by Llama
SpaceX stock is trading near an all-time low, but the company's growth potential is uncertain due to risks in its Starship program and uncertain profitability.
Imagine you have a lemonade stand, and you want to grow your business. You need to make sure you have enough cups, sugar, and lemons to make lemonade for all your customers. SpaceX is like a big lemonade stand, but instead of lemonade, they make rockets and satellites. They have some new ideas, like a super-powerful rocket and a way to make data centers in space. But, they need to make sure they can make these things work before they can grow their business. If they can't make it work, their business might not grow as much as people think.
Analysis
A $60B Vote of Confidence
SpaceX has undeniable growth potential, especially with its artificial intelligence (AI) division and Starlink satellite internet capability. Starlink generated $11.4 billion in revenue in 2025, up 50% year over year. Plus, it has fantastic profit margins. With 10 million subscribers and a global addressable market, there is plenty of room for Starlink to keep growing in the years ahead. The AI infrastructure business is at a much earlier stage but is likely to deliver fantastic growth over the next few quarters, compared with the $3.2 billion in revenue generated last year. Why? Because the company has invested billions in new data centers focused on AI and has now signed contracts with both Alphabet and Anthropic for access to compute that could be worth $26 billion annually.
Why Cursor?
There is a risk that both of these compute customers back out of these deals in the years ahead, but for now, SpaceX's 2025 revenue of $18.7 billion is set to explode higher. However, the company's growth is not without its challenges. SpaceX has some ambitious technologies it is trying to build, but they will require a lot of upfront capital and are uncertain to succeed. Take Starship, for example. This is the new rocket under development at SpaceX for years, designed to increase per-launch payload capacity compared to SpaceX's current workhorse, the Falcon 9. It is the tallest, heaviest, and most powerful rocket ever built, with a payload capacity of 100 to 150 tons to low Earth orbit.
The Road Ahead
The problem is that it has not proven it is ready to launch reliably for commercial customers, and it is unclear exactly when it will be ready, given the misfiring and launchpad explosion issues. This will also impede the future growth of SpaceX's "data centers in space" idea, on which a lot of the current valuation is based. Even if SpaceX solves the technical issues of getting these orbital data centers operational, it means nothing if there is a traffic jam on the launchpad. In the most optimistic scenario, the business could grow to $100 billion in revenue by 2030, but likely not much more than that due to limitations on launching payloads into orbit. Outside of the incremental margins on Starlink subscribers, SpaceX is likely not going to have fantastically high profit margins, either. Let's assume that revenue grows to $100 billion in 2030. On that revenue, SpaceX generates $20 billion in earnings (it was unprofitable last year). Compared to today's market cap of $1.64 trillion, that is a forward price-to-earnings ratio (P/E) of 82, which is a significant premium on trailing earnings, let alone a five-year forward projection.
Key points
- SpaceX has undeniable growth potential, especially with its AI division and Starlink satellite internet capability.
- The company's growth is not without its challenges, including the risk of technical issues with its Starship program.
- SpaceX's valuation is high, with a forward price-to-earnings ratio of 82.
- The company's revenue could grow to $100 billion by 2030, making it a highly profitable business.
- However, there are risks associated with SpaceX's growth, including the potential for its Starship program to experience technical issues and the uncertainty of its profitability.
If SpaceX can successfully deploy its Starlink satellite internet capability and its AI infrastructure business, the company's revenue could grow to $100 billion by 2030, making it a highly profitable business.
However, there are risks associated with SpaceX's growth, including the potential for its Starship program to experience technical issues and the uncertainty of its profitability. If these risks materialize, SpaceX's revenue growth could be slower than expected, and the company's stock price could decline.
