It’s been an eventful few weeks for those with shares in Space Exploration Technologies (NASDAQ:SPCX), or SpaceX as it’s best known.
With an IPO price of $135, the stock quickly climbed to a peak of $226. It’s now (8 August) changing hands for much less and with the first lock-in restrictions eased — longstanding shareholders are now able to sell some of their stock. This could put further pressure on a share price that’s already seemingly in decline.
However, a company that’s set itself the target of building “the systems and technologies to make life multiplanetary… and to extend the light of consciousness to the stars” was never going to achieve its objectives quickly.
But what might the future hold for patient investors? Let’s see.
Wall Street’s opinion
Thirty-one US analysts have 12-month price targets ranging from $75 to $800, with an average of $232.
But there’s only so much the group can achieve over the next year. Its first results as a listed company show that it’s not yet profitable and that it’s burning cash fast as a result of its huge investment programme.
Personally, I think SpaceX is the ultimate long-term investment. But where might its stock price be in, for example, 10 years?
SpaceX wants to take the fiction out of science fiction
Elon Musk
Any ideas?
Unfortunately, there’s little guidance here. However, one person who has come up with a figure is the group’s founder and majority shareholder, Elon Musk.
In July, responding to a conversation on X, he wrote: “You don’t seem to understand that SpaceX will be worth more than the rest of Earth if we accomplish our goals.”
So what’s our planet worth? I reckon it’s going to be a big number. Indeed, based on a formula devised by American astrophysicist Greg Laughlin that takes into account mass, temperature, age, and visibility, I’ve seen an estimate of $5 quadrillion (15 noughts).
On this basis, Musk is predicting that SpaceX could be worth up to – wait for it – 3.4m times more than it is today!
I think we need to stop now. These numbers are getting a little silly.
My view
Of course, Musk knows that his comments will help to keep everyone talking about the group. After all, he’s a brilliant marketeer. And nobody really knows how firmly his tongue is in his cheek when he makes some of his more outlandish claims.
But I think it’s fair to say that even if the group achieves only a fraction of what it says it wants to, its shares will be worth considerably more than they are today.
One of the highlights from the group’s results for the three months ended 30 June, is the performance of Starlink. The satellite internet service now has 12m subscribers in 167 countries. It reported an operating profit of $1.656bn during the period. In my opinion, the potential for this business is enormous.
And the group’s development of Starship, the world’s most powerful rocket, is also going to plan. Recently, it successfully completed its 13th test flight.
Leaving aside some of the hype, I think SpaceX is worth a closer look. But given its current extraordinary valuation — and the high-risk nature of its activities — I think investors should only consider having a small exposure in their portfolios.
Should you invest £5,000 in SpaceX right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if SpaceX made the list?
James Beard owns shares in Space Exploration Technologies.
