I think it’s fair to say that the Space Exploration Technologies (NASDAQ:SPCX) stock price (better know as SpaceX) has everyone talking following the group’s much-anticipated IPO.
But as is typical of Elon Musk’s companies, opinion’s divided over what might happen next. Let’s take a closer look at both sides of the debate.
The bear case
Analysts at Morningstar claim the stock’s “significantly overvalued”. They believe the group’s shares are worth $63 each, implying a market-cap of $780bn. And in my opinion, it’s hard to argue otherwise given that SpaceX is loss-making.
Morningstar’s valuation is based on concerns over the profitability (or, more accurately, the lack of profitability) of xAI, most famous for developing the Grok chatbot.
Even so, a $780bn valuation still sounds enormous. For perspective, that’s roughly the same as the combined market-caps of the three most valuable companies on the FTSE 100 – HSBC, AstraZeneca, and Shell – which reported $51.8bn of post-tax earnings in 2025.
Based on KeyBanc’s 2027 estimates, SpaceX trades on around 29 times sales. The figure for Nvidia is around 18. Even Musk has doubts over whether the group will succeed. Just before the listing, he revealed that the venture would “probably” fail.
SpaceX admits that it’s going to have to “incur significant capital expenditures over a period of years”. This could be a warning sign that shareholders are going to be asked for more money at some point.
Alternatively, the cash could come from the debt markets although, ultimately, any borrowings will need to be repaid from cash flows. Indeed, the group’s stock price fell sharply on 22 June, after SpaceX issued $20bn of bonds.
The bull case
On the other hand, Arete Research has a price target of $401. That’s a $5.3trn valuation, equivalent to an eye-watering 80 times forecast 2027 sales. This is based on the potential from the next generation of Starlink’s satellites, which could help the group’s connectivity division deliver broadband services to huge suburban markets.
However, these satellites are too large for SpaceX’s Falcon 9 rocket. Instead, they require its Starship rocket, which has yet to fly a commercial mission. Once viable, Starship could pave the way for orbital data centres.
Oppenheimer says SpaceX has a $10trn market opportunity by 2035. It claims it’s “the only vertically integrated AI company with the required capital, data, LLMs, hardware, manufacturing and engineering talent”. It has a price target of $250.
My view
On balance, I expect the SpaceX stock price to move closer to $401 than $63, but not just yet. I think the group’s going to have to demonstrate meaningful progress to justify its lofty market cap, which I suspect could take some time.
But even though I think it’s hard to fathom its current stock market valuation, I have to admit I have a small shareholding in SpaceX.
Yes, I’ll admit this makes me sound like a hypocrite. But I think there’s room in every investment portfolio for something that’s a bit speculative. If it fails spectacularly, it’s not going to harm me too much. On the other hand, in 10 years time, it could be my most valuable position.
For those prepared to add some significant risk to their existing holdings, I think it could be one to consider.
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James Beard owns shares in Space Exploration Technologies Corp.
