If you had the patience to sit things out on the opportunity to get in on the ground floor of the Space Exploration Technologies (NASDAQ:SPCX | SPCX Price Prediction) IPO, you now have a shot to punch a ticket at a decent discount to the IPO price of $135 per share or the $160 range that the stock spent most of its first day trading in. But just because you’re getting a better price than most retail traders doesn’t mean you’re actually getting a discount to intrinsic value, especially as the market continues to punish excessive spending on AI efforts.
SpaceX is a fantastic way to bet on the future of space, and as it starts launching orbital data centers as well as infrastructure on the Moon, perhaps Elon Musk’s firm will be the lone “haloscaler,” something Deutsche Bank referred to the company as, that leads others to consider the opportunities up above.
Even if you don’t buy Mr. Musk’s vision or you’re skeptical about AI data centers in orbit (the team will really need to innovate to beat physics in the vacuum of space), it’s also dangerous to bet against the space titan, even when it feels like shares can only move lower with time.
SpaceX shares are facing off-the-charts levels of volatility
Even the brave Dr. Michael Burry didn’t dare go short the company, at least not quite yet. With the stock pole-vaulting close to 16% unexpectedly on a day where shares were supposed to be punished as a new block of stock hit the public market, I’m sure many bears, and even bulls, are scratching their heads over what just happened. Indeed, a sell-the-news kind of scenario looks to have played out. Maybe even a short squeeze.
Either way, dip-buyers were plentiful at the end of last week, but with shares making a round trip back to the IPO price (shares are sitting just under two dollars away from $135), the big question is whether the FOMO (fear of missing out) will set in now that many perceive a bottom at just north of $100 per share.
Time will tell where SpaceX stock goes next, but, in my view, chasing the latest spike could be a risky move, especially as investors and analysts digest the latest quarterly earnings results, which were initially met with fierce selling.
Have dip-buyers forgiven the firm for its spending? Or was it the post-lock-up period for insiders that was the biggest of the fears? That’s the $2 trillion question as the $1.76 trillion company looks to make its next move.
This bear is no fan of SpaceX’s multiple
Either way, hedge fund pro Whitney Tilson isn’t a big fan of the SpaceX IPO and doesn’t think that the name is worth buying into weakness, even at below the $135 per-share IPO price. In his newsletter, the man cited obscenely high valuation metrics, most notably the “92 times trailing revenues” multiple. He’s right.
The price of admission was hefty, even at the recent lows. After a turbulent past week, the stock now goes for around 85 times price-to-sales (P/S), which is about as expensive as stocks get. While time will tell if the stock is “the most overvalued large-cap stock of all time,” let’s just say it’s going to be hard to grow into such a multiple as a nearly $2 trillion titan.
A lot of things need to go right for SpaceX to justify this multiple. Starship, orbital data centers, and, of course, terrestrial data centers and xAI are going to need to go right if the firm has a shot at becoming the double (or more) that many retail traders believe it to be.
Either way, the name is hard to analyze, even for tech pros. With the Street-high target at $800 and the low at $75, the projections seem to be all over the place. Personally, I’d wait for a drop to the double digits before even thinking about initiating a position. As I’ve noted in prior pieces, AI CapEx does not come cheap, and SpaceX might not deserve a “free pass” for its own hefty spend.
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