The Space Exploration Technologies (NASDAQ:SPCX) share price has pulled off something like SpaceX’s 25 July test flight. After a promising start, it’s had a hard splashdown.

Shares have fallen 41% from their peak of $225.64 to around $133, and are now sitting roughly 17% below where they closed on day one back in June. So is it a bargain right now?

Watch the business, not the stock

While the SpaceX stock has been volatile, the underlying business hasn’t changed much. It’s still the world’s dominant launch provider and it’s still growing impressively.

This is what investors need to focus on. Over the long term, the share price is likely to reflect the company’s cash flows. 

Unless the stock goes to zero, an investment at $133 gives investors better returns than one at $225. But better value doesn’t always mean good enough value. 

There’s a real case for thinking that SpaceX shares have gone from an outright absurd to a very silly one. And it’s easy to see why:

For the stock to get back to $225, one of two things needs to happen. The price-to-sales (P/S) multiple needs to expand, or revenues need to grow. 

A P/S ratio of 59 might be lower than it was, but it’s still exceptionally high. So I think the big question is how much can sales growth push the share price higher.

Where is the growth coming from?

For SpaceX, the big question concerns xAI. Since February’s merger, SpaceX has invested heavily in ‘Starmind’ – its plan to bolt Grok-class compute onto satellites rather than data centres. 

The first AI1 satellite is due to fly in 2027, with SpaceX asking regulators for permission to eventually launch up to a million. And to be clear, this is a bet on infrastructure, not having the leading model.

The idea is that whoever wins the AI race will need power and cooling and space offers both. If it works, Grok doesn’t have to beat Claude or ChatGPT – SpaceX can sell its low-cost resources to others.

Given the stock market’s current worries about infrastructure spending, this could be smart. Selling compute to whoever wins could be a much more attractive plan than trying to build the best model. 

The risk is that this is big ‘if’. Radiation, heat, and the small matter of nobody having a technician within 300 miles are all big engineering challenges.

Investors, however, shouldn’t underestimate the potential of SpaceX’s strategy. It’s not just burning cash for fun – it’s got a unique strategy for cashing in on a potentially transformative technology. 

Time to buy?

For diligent investors, the numbers to focus on aren’t just the share price. Falcon 9’s launch cadence, Starlink subscriber additions, and SpaceX’s P/S ratio are all worth keeping an eye on.

The stock might have fallen 41% from its highs. But if it hadn’t recently traded at $225, I’m not convinced there would even be a question over whether it might be cheap at $133.

Should you invest £5,000 in SpaceX right now?

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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if SpaceX made the list?

Stephen Wright does not own shares in any of the companies mentioned.